Appeal details
Counselvise Citation
[2018] 125 COUNSELVISE.COM (IT) 7905 (ITAT-AHMEDABAD)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
2 year(s) 9 month(s) 6 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
11-07-2018
Appeal Filed By
Department
Order Result
Dismissed
Bench Allotted
Not Allotted
Assessment Year
2009-2010
Appeal Filed On
05-10-2015
Judgement Text
ITA NOS. 2783 TO 2787/AHD/2015 DCIT VS. BELGIUM GLASS & CERAMICS P LTD ASSESSMENT YEAR: 2005-06 TO 2009-10 PAGE 1 OF 20 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH, AHMEDABAD [CORAM: PRAMOD KUMAR AM AND MAHAVIR PRASAD JM] ITA NOS. 2783 TO 2787/AHD/2015 ASSESSMENT YEAR: 2005-06 TO 2009-10 THE DY. COMMISSIONER OF INCOME-TAX ............ ......APPELLANT CIRCLE-1(1)(1), VADODARA VS. BELGIUM GLASS & CERAMICS P. LTD. ...........................RESPONDENT PADRA-JAMBUSAR ROAD, NR. VILLAGE-DABHASA, VADODARA-391 440 [PAN : AAACB 8651 P] APPEARANCES BY: APARNA AGARWAL & MUDIT NAGPAL FOR THE APPELLANT MUKUND BAKSHI FOR THE RESPONDENT DATE OF CONCLUDING THE HEARING : 04.07.2018 DATE OF PRONOUNCING THE ORDER : 11.07.2018 O R D E R PER PRAMOD KUMAR, AM: 1. THESE FIVE APPEALS FILED BY THE ASSESSING OFFICE R ARE DIRECTED AGAINST A CONSOLIDATED ORDER DATED 28.07.2015 PASSED BY THE L EARNED CIT(A)-1, VADODARA IN THE MATTER OF ASSESSMENTS UNDER SECTION 143(3) R.W. S. 147 OF THE INCOME-TAX ACT, 1961 FOR THE ASSESSMENT YEARS 2005-06, 2006-07, 200 7-08, 2008-09 AND 2009-10. 2. COMMON GRIEVANCE RAISED IN ALL THESE APPEAL IS A S FOLLOWS:- ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LD. CIT(A) HAS ERRED IN BY DELETING THE ADDITIONS MADE BY AO ON TH E FINDINGS OF UNDISCLOSED SALES OF THE EXCISE AUTHORITIES BY IGNORING THE FAC T THAT INFORMATION FROM THE EXCISE AUTHORITIES WHICH FUNCTIONS UNDER THE MINIST RY OF FINANCE, DEPARTMENT OF REVENUE ARE AUTHENTIC AND HAS EVIDENTIARY VALUE. THE REMOVAL OF GOODS HAS LED TO SUPPRESSED SALES WHICH ARE BASED UPON TH E INVESTIGATION CARRIED OUT BY THE DGCEI, AHMEDABAD ON THE BASIS OF STATEME NT RECORDED OF THE DIRECTORS OF THE COMPANY AND CONFRONTING THEM WITH SEVERAL INCRIMINATING DOCUMENTS AND ALSO IN CORROBORATION WITH STATEMENTS OF VARIOUS OTHER PARTIES. 3. BRIEFLY STATED RELEVANT FACTS ARE LIKE THIS. TH E ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURE OF FRIT, WHICH IS US ED IN THE MANUFACTURE OF CERAMIC ITA NOS. 2783 TO 2787/AHD/2015 DCIT VS. BELGIUM GLASS & CERAMICS P LTD ASSESSMENT YEAR: 2005-06 TO 2009-10 PAGE 2 OF 20 TILES. THE ASSESSEE-COMPANY SUPPLIES ITS PRODUCTS T O VARIOUS CERAMIC TILE MANUFACTURERS ACROSS THE STATE OF GUJARAT. NONE OF THE ORIGINAL INCOME-TAX RETURNS FILED BY THE ASSESSEE WAS SUBJECTED TO SCRUTINY ASS ESSMENT PROCEEDINGS UNDER SECTION 143(3) OF THE ACT. IT WAS ONLY AS A RESULT OF SEARCH OPERATIONS CARRIED OUT BY THE DIRECTORATE GENERAL OF CENTRAL EXCISE INTELLIGE NCE (DGCEI) ON THE MANUFACTURERS OF CERAMIC TILES SITUATED AT MORBI THAT SOME INFORM ATION WAS GATHERED ABOUT UNDERVALUATION OF PRODUCTS SOLD AS ALSO THE RAW-MAT ERIALS CONSUMED. BASED ON THIS INFORMATION, THE ASSESSEE COMPANY WAS ALSO SUBJECTE D TO A SEARCH OPERATION BY DGCEI ON 21.08.2008. IT WAS ON THE BASIS OF THE IN FORMATION SO OBTAINED BY THE DGCEI AND THE SEARCH OPERATION CARRIED OUT BY THE D GCEI THAT THE ASSESSMENTS OF THE ASSESSEE WERE RE-OPENED AND SHOW-CAUSE NOTICE W AS ISSUED AS TO WHY THE AMOUNT OF SALES AS ESTIMATED BY THE EXCISE DEPARTME NT SHOULD NOT BE CONSIDERED AS AN UNACCOUNTED SALES MADE BY THE ASSESSEE. NOT SAT ISFIED BY THE EXPLANATION OF THE ASSESSEE, THE ASSESSING OFFICER PROCEEDED TO ADOPT THE FIGURES OF EXCISE DEPARTMENT AS UNACCOUNTED SALES AND COMPUTED PROFIT MARGIN THEREON AT THE RATE OF 20%. THE ADDITIONS WERE THUS MADE FOR THE ALLEGED UNACCOUNTED SALES. AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE TH E LEARNED CIT(A) WHO DELETED THE SAID ADDITIONS BY OBSERVING, INTER ALIA , AS FOLLOWS:- I HAVE CONSIDERED THE ASSESSMENT ORDERS AND THE SU BMISSIONS BY THE APPELLANT'S AR. AS ALREADY STATED ABOVE, IN THE ASS ESSMENT ORDER FOR ALL THE ASSESSMENT YEARS, THE ADDITION MADE BY THE AO IS EN TIRELY BASED UPON THE FINDINGS OF THE EXCISE AUTHORITY IN THE DEMAND CUM SHOW CAUSE NOTICE ISSUED ON 8.10.2009. NO SEPARATE VERIFICATION OF THE CONTE NTIONS RAISED BY THE EXCISE AUTHORITIES HAS BEEN MADE BY THE AO EXCEPT FOR COND UCTING A SURVEY AT THE OFFICE PREMISES OF THE APPELLANT ON 15.03.2012. THE AO HAS NOT GIVEN ANY FINDING IN HER ASSESSMENT ORDER THAT ANY NEW INCRIM INATING DOCUMENTS OR FINDINGS WERE DISCOVERED DURING THE COURSE OF THIS SURVEY. IN THE STATEMENT RECORDED DURING THE COURSE OF THE SURVEY ALSO, SO F AR AS THESE ASSESSMENT YEARS ARE CONCERNED, THE QUESTION HAVE BEEN ASKED O NLY REGARDING THE SEARCHES CONDUCTED BY THE CENTRAL EXCISE AUTHORITIE S AT THE BUSINESS PREMISES AND THE FINDINGS GIVEN BY THEM IN THEIR RE PORT. AS ALREADY STATED BY THE APPELLANT AND REPRODUCED ABOVE, THE APPELLANT'S DIRECTOR HAD, WITHOUT ADMITTING OF ANY WRONG DOING, VOLUNTARILY OFFERED A DDITIONAL INCOME DURING THE FY'2004-05 TO FY 2007-08 BASED ON THE EXCISE DUTY P AID UNDER PROTEST. THE QUANTUM OF SUCH ADDITIONAL INCOME WAS RS. 75 LAKHS WHICH WAS DISTRIBUTED TO THE ALL THESE ASSESSMENT YEARS AS ALREADY STATED AB OVE, THUS, THE ADDITIONAL INCOME DISCLOSED FOR THESE ASSESSMENT YEARS DURING THE COURSE OF THE SURVEY PROCEEDINGS WERE ALSO ENTIRELY BASED UPON THE FINDI NGS OF THE EXCISE AUTHORITY DURING THE COURSE OF THEIR SEARCH OPERATI ON AND NOT BASED UPON ANY DOCUMENT OR NEW FACT DISCOVERED BY THE AO DURING TH E COURSE OF SUCH SURVEY. ALL THESE FACTS MAKE IT CLEAR THAT THE AO HAS NOT G IVEN ANY INDEPENDENT FINDING OR HAS NOT MADE ANY INDEPENDENT ENQUIRY TO ARRIVE AT THE UNACCOUNTED SALES OF THE APPELLANT RESULTING INTO THE ADDITION OF UNDISCLOSED PROFITS FOR ALL THESE ASSESSMENT YEARS. SINCE, THE FINDINGS OF THE AO ARE BASED SIMILARLY UPON THE FINDINGS OF THE EXCISE AUTHORITY, ONCE THE ORDER OF THE EXCISE AUTHORITY ARE QUASHED BY CESTAT, ANY ADDITION MADE IN THE ASSESSMENT ORDER PASSED UNDER THE IT ACT, 1961 IS ALSO REQUIRE D TO BE DELETED IN PURSUANCE TO SUCH ORDER OF CESTAT. THIS IS AS PER T HE JUDICIAL ITA NOS. 2783 TO 2787/AHD/2015 DCIT VS. BELGIUM GLASS & CERAMICS P LTD ASSESSMENT YEAR: 2005-06 TO 2009-10 PAGE 3 OF 20 PRONOUNCEMENTS, RELIED UPON BY THE APPELLANT IN ITS SUBMISSIONS AS ALREADY STATED ABOVE. HENCE THE ADDITIONS MADE BY THE AO FO R ALL THESE ASSESSMENT YEARS BASED UPON THE FINDINGS OF UNDISCLOSED SALES OF THE EXCISE AUTHORITIES ARE DIRECTED TO BE DELETED. 4. THE ASSESSING OFFICER IS NOT SATISFIED AND IS IN APPEAL BEFORE US. 5. WHEN THESE APPEALS WERE CALLED OUT FOR HEARING, LEARNED REPRESENTATIVES FAIRLY AGREE THAT THE ISSUE IN THE APPEALS IS COVERED BY A CO-ORDINATE BENCH DECISION IN THE CASE OF M/S. ZIRCONIA CERA TECH GLAZES & M/S. GROWM ORE CERAMICS VS. DCIT (ITA NOS. 376 & 377/AHD/2016 FOR AYS 2007-08 & 2008-09 A ND ITA NOS. 988, 989 & 990/AHD/2016 FOR AYS 2006-07 TO 2008-09; ORDER DATE D 30.11.2017). OUR ATTENTION WAS ALSO INVITED TO THE FACT THAT, IN THESE CASES A LSO, THE RELATED QUANTUM ADDITIONS IN RESPECT OF EXCISE PROCEEDINGS HAVE BEEN DELETED BY THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL (CESTAT), WEST ZONAL BENCH, AHMEDABAD AND THE ORDER SO PASSED BY THE TRIBUNAL HAS REACHED FINALITY IN THE LIGHT OF HONBLE JURISDICTIONAL HIGH COURTS JUDGMENT DATED 21.09.2017 REJECTING THE APP EALS FILED AGAINST THE SAID ORDER. IN THE LIGHT OF THIS POSITION, LEARNED REPRESENTATI VES FAIRLY AGREE THAT THE ACTION OF THE LEARNED CIT(A) IS REQUIRED TO BE CONFIRMED IN THE L IGHT OF CO-ORDINATE BENCH DECISION IN THE CASE OF M/S. ZIRCONIA CERA TECH GLAZES & M/ S. GROWMORE CERAMICS (SUPRA), EVEN AS LEARNED DEPARTMENTAL REPRESENTATIVE VEHEMEN TLY RELIES UPON THE STAND OF THE ASSESSING OFFICER. SHE ALSO SUBMITS THAT THE E XCISE DUTY PROCEEDINGS AND INCOME-TAX PROCEEDINGS ARE SEPARATE AND DISTINCT PR OCEEDINGS AND MERELY BECAUSE THE ADDITIONS IN THE CASE OF EXCISE DUTY HAVE BEEN DELETED, IT CANNOT BE A REASON ENOUGH FOR DELETION OF INCOME-TAX ADDITIONS ALSO. 6. WE SEE NO REASONS TO TAKE ANY OTHER VIEW OF THE MATTER THAN THE VIEW SO TAKEN BY THE CO-ORDINATE BENCH IN THE CASE OF M/S. ZIRCONIA CERA TECH GLAZES & M/S. GROWMORE CERAMICS (SUPRA). IN THE SAID DECISION, T HE CO-ORDINATE BENCH HAS, INTER ALIA, OBSERVED AS FOLLOWS:- 10. NOW ASSESSEE HAS FILED APPEAL BEFORE US ON THE GROUND RAISED BY ASSESSEE AS ALREADY REPRODUCED IN PARA 2. THE STAND OF THE LD. AUTHORIZED REPRESENTATIVE ON BEHALF OF ASSESSEE IS THAT ADDITIONS HAVEBEEN SOLELY MADE ON THE BASIS OF SHOW-CAUSE NOTICE ISSUED BY THE DGCEI WHEREIN, IT WAS OBSERVED THAT ASSESSEE IS ENGAGED IN UNDER VALUATION OF SALES AND CLANDESTINE REMOVAL OF GOODS. THUS, ASSESSING O FFICER HAS REOPENED ASSESSMENT SOLELY ON THE BASIS OF SCN ISSUED BY DGCEI AND ULTIMATELY MADE ADDITIONS OF ESTIMATED GROSS PROFIT, ON UNDER VALUATION OF SALES AND CLANDESTINE REMOVAL OF GOODS WITHOUT INDEPENDENT APPLICATION OF MIND. LD. AUTHORISED REPRESENTATIVE FURTHER SUBMITTED THAT UNDER EXCISE PROCEEDINGS, ADJUDICATING AUTHORITY PASSED THE ORDE R, WHICH WAS ULTIMATELY CARRIED IN APPEAL UPTO HONBLE CESTAT. HONBLE CESTAT VIDE ORDER DATE D 12.02.2015 HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE BY HOLDING THAT DEPARTMEN T CANNOT ESTIMATE VALUE OF ALLEGED SUPPRESSION OF SALES AS WELL AS CLANDESTINE REMOVAL OF GOODS MERELY ON THE BASIS OF ASSUMPTION AND SURMISES. THE OPERATIVE PORTION OF C ESTAT ORDER IS REPRODUCED HERE AS UNDER: 6. IN THESE PROCEEDINGS THE FOLLOWING ISSUES ARE R EQUIRED TO BE DELIBERATED UPON:- (I) WHETHER THE APPELLANTS MENTIONED IN PARA 5.1 AB OVE HAVE INDULGED IN CLANDESTINE MANUFACTURE AND CLEARANCE OF CERAMIC GL AZED MIXTURE (FRIT), IN ITA NOS. 2783 TO 2787/AHD/2015 DCIT VS. BELGIUM GLASS & CERAMICS P LTD ASSESSMENT YEAR: 2005-06 TO 2009-10 PAGE 4 OF 20 VIEW OF THE ADJUDICATION ORDERS PASSED THE ADJUDICA TING AUTHORITIES ON THE BASIS OF NATURAL GAS CONSUMPTION NORMS PER METRIC T ON? (II) WHETHER THE APPELLANTS MENTIONED IN PARA 5.1 A ND 5.2 HAVE INDULGED IN UNDERVALUATION OF FRIT AND ALSO CLANDESTINELY CLEAR ED FRIT AS PER A PERSONAL LEDGERS RETRIEVED FROM A PEN-DRIVE RECOVERED FROM S ANYO AND OTHER PERSONAL RECORDS AND PEN-DRIVES FROM THE CERAMIC TI LE MANUFACTURERS READ WITH THEIR STATEMENTS ? (III) WHETHER THE ADJUDICATING AUTHORITIES WERE JUS TIFIED IN DENYING CROSS- EXAMINATION OF WITNESS UNDER THE PROVISIONS OF SECT ION 9D OF THE CENTRAL EXCISE ACT, 1944 READ WITH THE JUDICIAL PRONOUNCEME NTS ON THE ISSUE? 7. FOR THE PURPOSE OF POINT NO. 6(I) ABOVE AND CLAN DESTINE REMOVAL OF FRIT BY THE FRIT MANUFACTURERS ADJUDICATING AUTHORITIES HAVE MA INLY RELIED UPON AVERAGE CONSUMPTION OF NATURAL GAS FOR MANUFACTURERS ONE MT OF FRIT BY TAKING DATA EITHER FROM THE APPELLANTS OR BY CONDUCTING SOME GAS CONSUMPTIO N STUDIES. BESIDES CERTAIN STUDIES/ DATA WITH RESPECT TO AVERAGE PACKING TIME TAKING FOR FILLING OF FINISHED GOODS (FRIT) IN THE PLASTIC BAGS AND CONSUMPTION OF ELECT RICITY UNITS PER MT OF FRIT ON THE BASIS OF APPELLANTS RECORDS, HAVE ALSO BEEN USED TO SUPPORT THAT CLANDESTINE MANUFACTURE AND CLEARANCES HAVE BEEN EFFECTED BY TH E CONCERNED APPELLANTS. 8. AS PER PARA 3.5 ABOVE, CLANDESTINE MANUFACTURE A ND CLEARANCE OF FRITS BY THE APPELLANTS HAVE BEEN ESTIMATED BY TAKING DIFFERENT GAS CONSUMPTION NORMS WHICH EITHER GOT SUGGESTED BY THE APPELLANT OR WORKED OUT BY THE INVESTIGATION. AVERAGE GAS CONSUMPTION FROM 263 SCMS TO 484 SCMS WERE FIXE D FOR DIFFERENT APPELLANTS AND WERE CONSIDERED BY THE ADJUDICATING AUTHORITIES FOR CALCULATING/ CONFIRMING THE DEMANDS AND IMPOSING PENALTIES. FOLLOWING OBSERVAT IONS HAVE BEEN MADE BY THE ADJUDICATING AUTHORITY IN THE CASE OF BELGIUM GLASS & CERAMICS PVT. LIMITED (APPEAL NOS. 796 TO 798/2011) IN PARAS 24.4.4, 24.5.4 AND 2 4.5.5 WHILE PASSING OIO NO. 05/VRC-1/MP/2011 DATED 23.03.2011 AND JUSTIFYING TH E CALCULATIONS/ ESTIMATIONS MADE BY REVENUE:- 24.4.4. THUS, EVEN BY CONSIDERING THAT 5 NOS. OF K ILN OPERATED BY M/S. BELGIUM DURING THE ENTIRE PAST PERIOD, WERE OF LOWE ST SIZE, VIZ. 146X6, EACH ONE OF WHICH IS HAVING 4000 SCMS OF NATURAL GAS CON SUMPTION PER DAY OF 24 HOURS, THE NET OUTPUT OF CERAMIC FRIT PER KILN PER DAY BY CONSUMING 450 SCMS OF GAS WOULD NOT BE LESS THAN 8.888 MTS. IN OTHER WORDS, THE MINIMUM MONTHLY PRODUCTION OF FRIT PER KILN WOULD BE AT LEA ST 266.640 NTS, AND THE TOTAL MINIMUM MONTHLY PRODUCTION FOR ALL THE 5 KILNS WOUL D NOT BE LESS THAN 1333.200 MTS. 24.4.5. THE ABOVE PRODUCTION OF M/S. BELGIUM IS FUL LY SUBSTANTIATED FROM THE ANNEXURE F REFERRED SUPRA, WHEREIN IT IS OBSERVED T HAT DURING A PERIOD OF 18 MONTHS OUT OF THE TOTAL 65 MONTHS COVERED THEREIN, THEY HAVE REPORTED PRODUCTION OF FRIT EXCEEDING THE QUANTITY OF 1300 M TS. IN FACT, DURING THE MONTH OF JULY 2005, THE RECORDED PRODUCTION QUANTIT Y WAS 2574.500 MTS WITH A TOTAL GAS CONSUMPTION RATE OF 370.557 SCM PER MT, WHICH CLEARLY REVEALS THAT THE AFORESAID CALCULATED CAPACITY OF 1333 MTS IS THE BAREST MINIMUM. SCRUTINY OF THE CHART, HOWEVER REVEALS THAT DURING 15 MONTHS, THEY HAVE DECLARED PRODUCTION QUANTITY LESS THAN 1000 MTS PER MONTH EVEN WITH MUCH HIGHER RATE OF GAS CONSUMPTION. DURING 32 MONTHS, THE TOTAL QUANTITY DECLARED BY THEM IN THEIR STATUTORY RECORDS WAS LES S THAN 1275MTS WHEREIN ALSO THE GAS CONSUMPTION WAS EXCEEDING THE AVERAGE REQUIREMENT OF 450SCM PER MT. 24.5.4. THUS THE ABOVE PANCHNAMA PROCEEDINGS, UNAMB IGUOUSLY REVEALED THAT THE NORMAL TIME REQUIRED FOR MANUFACTURING 50 KGS OF FRIT WAS 8 MINUTES, I.E. 100 KGS IN 16 MINUTES AND 1 MT IN 2 HOURS 40 M INUTES. THIS REVEALS THAT ONE KILN CAN MANUFACTURE 10 MT OF FRIT PER DAY OF 2 4 HOURS, WHICH MEANS THAT THE TOTAL QUANTITY OF FRIT PRODUCED BY M/S. BELGIUM WITH THEIR 5 KILNS IS 50MTS PER DAY. THUS, IT IS OBSERVED THAT NORMAL QUANTITY OF FRIT WHICH COULD BE ITA NOS. 2783 TO 2787/AHD/2015 DCIT VS. BELGIUM GLASS & CERAMICS P LTD ASSESSMENT YEAR: 2005-06 TO 2009-10 PAGE 5 OF 20 PRODUCED IN THE FACTORY OF M/S. BELGIUM BY USING 5 KILNS AT A TIME, WOULD BE 1500MT PER MONTH. 24.5.5 COMPARISON OF THE MONTHLY PRODUCTION OF FRIT ACCOUNTED FOR BY M/S. BELGIUM IN THEIR STATUTORY RECORDS AS APPEARING IN COL. NO. 2 OF THE ANNEXURE- F VIS-A-VIS THE ACTUAL QUANTITY WHICH WOULD HAVE PR ODUCED BY THEM IN THEIR FACTORY AS DISCUSSED ABOVE, FULLY SUBSTANTIATES LAR GE SCALE SUPPRESSION OF PRODUCTION BY THEM. THE FACT THAT THE QUANTITY REC ORDED IN THEIR STATUTORY RECORDS DURING SOME MONTHS, EXCEEDS THE AFORESAID A VERAGE QUANTITY OF 1500MT PER MONTH, INDICATES THAT THE PHYSICAL VERIF ICATION CONDUCTED AT THE FACTORY AND INFERENCE DRAWN IN RESPECT OF THEIR PRO DUCTION CAPACITY IS FACTUAL. IN ORDER TO HAVE AN IDEA ON THE QUANTUM OF THE SUPP RESSION OF PRODUCTION BY M/S. BELGIUM COL. NO. 7 HAS BEEN ADDED TO THE ANNEX URE-F WHICH INDICATES THE DIFFERENCE OF QUANTITY ACCOUNTED FOR IN THE OFF ICIAL RECORDS AS AGAINST THE AVERAGE PRODUCTION OF 1500MT PER MONTH. THE CHART INDICATES THAT EXCEPT DURING A PERIOD OF 7 MONTHS, THE MONTHLY AVERAGE PR ODUCTION NOTICED DURING THE AFORESAID PANCHNAMA DATED 26.09.2009 EXCEEDED T HE QUANTITY ACCOUNTED FOR BY M/S. BELGIUM IN THEIR STATUTORY RE CORDS. 8.1 FROM THE ABOVE FINDINGS OF THE ADJUDICATING AUT HORITY GAS CONSUMPTION OF 450 SCM PER MT OF FRIT MANUFACTURE HAS BEEN ARRIVED AT FOR M/S. BELGIUM GLASS & CERAMICS PVT. LIMITED WHICH ACCORDING TO REVENUE WI LL GAVE A CAPACITY OF 1333.2 MTS PER MONTH TO THAT APPELLANT. IN PARA 24.5.4 AN D 24.5.5, THE ADJUDICATING AUTHORITY OBSERVED THAT THE NORMAL QUANTITY OF FRIT THAT COUL D BE MANUFACTURED BY THIS APPELLANT WILL BE 1500MTS PER MONTH. IT HAS ALSO BEEN FAIRLY MENTIONED BY THE ADJUDICATING AUTHORITY THAT IN CERTAIN MONTHS THE PRODUCTION OF THIS APPELLANT WAS ALSO MORE THAN 1500MT. ADJUDICATING AUTHORITY HAS ONLY SEEN ONE S IDE OF THE COIN THAT A PRODUCTION OF MORE THAN 1500MT IS POSSIBLE, THEREFORE A CAPACI TY OF AROUND 1300MTS IS JUSTIFIED. THE OTHER SIDE OF COIN WILL BE THAT APPELLANT HAS A LSO REFLECTED A QUANTITY OF MORE THAN 1500MTS OF FRIT MANUFACTURED PER MONTH IN THE RECOR DS. SUCH A DEPICTION IN THE BOOKS OF ACCOUNTS GIVES A CERTIFICATION TO THE CORR ECTNESS OF THE DATA MAINTAINED BY THE APPELLANT. THE VERY FACT THAT USING GAS CONSUM PTION METHOD AND TIME TAKEN FOR PACKING FINISHED GOODS ADOPTED BY THE LOWER AUTHORI TIES GIVES DIFFERENT ESTIMATIONS OF MANUFACTURE AND CLEARANCES BY THIS APPELLANT, THE S AME CANNOT BE TAKEN AS A CORRECT/ DEPENDABLE METHOD FOR CALCULATING CLEARANC ES AND IS ALSO NOT PRESCRIBED. IN THE CASE OF BELGIUM GLASS & CERAMIC PVT. LIMITED, A S PER ANNEXURE-F TO THE SHOW CAUSE NOTICE DATED 08.10.2009, GAS CONSUMPTIONS OF 383.715SCM AND 321.959 SCM FOR MANUFACTURING ONE MT HAVE ALSO BEEN INDICATED I N THE RECORDS OF THE APPELLANTS ALONGWITH HIGHER CONSUMPTION OF GAS. IT IS NOT UND ERSTOOD AS TO WHY AN ARBITRARY FIGURE OF 450SCM PER MT IS REQUIRED TO BE TAKEN FOR ESTIMATING THE PRODUCTION/ CLEARANCE OF FINISHED GOODS FRITS. IN THE SAME ANN EXURE-F THE UNITS OF ELECTRICITY CONSUMED IN CERTAIN MONTHS IS LESS THAN 55 UNITS AN D IS EVEN AS LOW AS 40.153 UNITS. THE ABOVE DATA OF THE APPELLANT CONTAINED IN ANNEXU RE-F TO THE SHOW CAUSE NOTICE DATED 08.10.2009 REFLECTS THAT RECORDS MAINTAINED B Y THIS APPELLANT ARE GENUINE AND CORRECT. THERE IS NO CORROBORATING EVIDENCE OF EXC ESS/ SHORT RAW MATERIALS OF FRIT PROCURED CLANDESTINELY BY THIS APPELLANT OR ANY OF THE OTHER APPELLANTS. THERE IS NO SEIZURE OF CLANDESTINELY REMOVED GOODS FROM ANY OF THE APPELLANTS OR ANY EXCESS STOCK OF FINISHED GOODS. NO CASH HAS BEEN SEIZED F ROM ANY OF THE PREMISES SEARCHED BY THE REVENUE WHEN CRORES OF CASH HAS BEEN ALLEGED TO HAVE BEEN TRANSFERRED TO THE APPELLANTS ACROSS THE COUNTRY. THERE IS ALSO NO EVIDENCE OF EXCESS PROCUREMENT OF RAW MATERIALS. IT IS ALSO CLAIMED BY THE APPELL ANTS THAT CALORIFIC VALUE OF THE GAS SUPPLIED BY GAIL VARY IN GCV (GROSS CALORIFIC VALUE ) AND NCV (NET CALORIFIC VALUE) WHICH ALSO EFFECT CONSUMPTION OF GAS ALONGWITH THE TYPE OF FRIT GRADE MANUFACTURED. IT IS OBSERVED FROM THE GROUND (D), OF THE GROUNDS OF APPEAL FILED BY M/S. BELGIUM GLASS & CERAMIC PVT. LIMITED, IN THE CASE OF BELGIUM THAT SUCH DOCUMENTARY EVIDENCES OF GAS HAVING DIFFERENT GCV AND HCV EXIST ON RECORDS. THIS ARGUMENT HAS BEEN BRUSHED ASIDE BY THE ADJUDICATING AUTHORITY THAT SH RI PIYUSH MAKADIA, DIRECTOR OF THE APPELLANT HAS AGREED TO CONSUMPTION OF 450SCM/PMT ( PLUS/MINUS) 10% GAS CONSUMPTION. THE ABOVE CALCULATIONS ARE THUS BASED ON STATEMENT OF SHRI PIYUSH MAKADIA, DIRECTOR REPRODUCED IN OIO DATED 23.03.201 1 AT PARAS 53 & 54. HOWEVER, SUCH STATEMENTS CAN NOT BE RELIED UPON UNLESS THE C ROSS-EXAMINATION OF THE WITNESSES IS EXTENDED TO THE APPELLANTS. ITA NOS. 2783 TO 2787/AHD/2015 DCIT VS. BELGIUM GLASS & CERAMICS P LTD ASSESSMENT YEAR: 2005-06 TO 2009-10 PAGE 6 OF 20 8.2 IN THE REMAINING CASES ALSO WHERE CLANDESTINE C LEARANCES HAVE BEEN ESTIMATED ON THE BASIS OF NATURAL GAS CONSUMPTION, THERE IS NO EVIDENCE OF EXCESS RAW MATERIAL PURCHASED BY THE APPELLANTS. NO SHORT AGES/ EXCESS OF RAW MATERIALS OR FINISHED GOODS HAVE BEEN DETECTED ANY WHERE DURING THE INVESTIGATIONS. IN NONE OF THE CASES THERE IS ANY SEIZED CASH OR SEIZURE OF CL ANDESTINELY REMOVED FINISHED GOODS DURING TRANSPORTATION FROM THE FACTORY PREMIS ES OF THE APPELLANTS. IN THIS REGARD APPELLANTS HAVE RELIED UPON THE CASE LAWS OF ARYA FIBERS PVT. LIMITED VS. CCE, AHMEDABAD-II [2014 (311) ELT 529 (TRI. AHMD.)] AND GUPTA SYNTHETICS LIMITED VS. CCE, AHMEDABAD II [2014 (312) ELT 225 (TRI. AHM D.)]. PARA 38 AND 40 OF THE CASE LAW OF ARYA FIBERS PVT. LIMITED VS. CCE AHMEDA BAD-II IS RELEVANT AND IS REPRODUCED BELOW:- 38. IT WAS, THEREFORE, THE SUBMISSION OF THE LD. S ENIOR ADVOCATE THAT, IN THREE CASES CITED BY THE LD. SPECIAL COUNSEL FOR TH E REVENUE, THIS TRIBUNAL AND HONBLE HIGH COURT OF GUJARAT HAD TAKEN A VIEW THAT THERE WAS NO NEED TO PROVE SUCH CLANDESTINE CLEARANCE WITH MATHEMATIC AL PRECISION. THESE WERE CASES WHERE EVIDENCE WAS AVAILABLE REGARDING UNACCO UNTED DUTY PAID GOODS BEING FOUND, SHORTAGE OF FINISHED GOODS FOUND AND E VIDENCE REGARDING SUPPLY OF RAW MATERIALS AND RECEIPT OF COMMISSION BY BROKE RS, WHICH WERE ALL TANGIBLE EVIDENCE OF CLANDESTINE CLEARANCES. IT WAS FURTHER SUBMITTED BY THE LD. SENIOR ADVOCATE THAT THE CASES CITED BY HIM WER E CASES WHERE NO SUCH EVIDENCE WAS AVAILABLE AT ALL AND THE LAW LAID DOWN AS APPLICABLE TO SUCH CASES, TO WHICH CATEGORY THE PRESENT CASE BELONGS. 40. AFTER HAVING VERY CAREFULLY CONSIDERED THE LAW LAID DOWN BY THIS TRIBUNAL IN THE MATTER OF CLANDESTINE MANUFACTURE A ND CLEARANCE, AND THE SUBMISSIONS MADE BEFORE US, IT IS CLEAR THAT THE LA W IS WELL-SETTLED THAT, IN CASES OF CLANDESTINE MANUFACTURE AND CLEARANCES, CE RTAIN FUNDAMENTAL CRITERIA HAVE TO BE ESTABLISHED BY REVENUE WHICH MA INLY ARE THE FOLLOWING : (I) THERE SHOULD BE TANGIBLE EVIDENCE OF CLANDESTIN E MANUFACTURE AND CLEARANCE AND NOT MERELY INFERENCES OR UNWARRANTED ASSUMPTIONS; (II) EVIDENCE IN SUPPORT THEREOF SHOULD BE OF : (A) RAW MATERIALS, IN EXCESS OF THAT CONTAINED AS P ER THE STATUTORY RECORDS; (B) INSTANCES OF ACTUAL REMOVAL OF UNACCOUNTED FINI SHED GOODS (NOT INFERENTIAL OR ASSUMED) FROM THE FACTORY WITHO UT PAYMENT OF DUTY; (C) DISCOVERY OF SUCH FINISHED GOODS OUTSIDE THE FA CTORY; (D) INSTANCES OF SALE OF SUCH GOODS TO IDENTIFIED P ARTIES; (E) RECEIPT OF SALE PROCEEDS, WHETHER BY CHEQUE OR BY CASH, OF SUCH GOODS BY THE MANUFACTURERS OR PERSONS AUTHORIZ ED BY HIM; (F) USE OF ELECTRICITY FAR IN EXCESS OF WHAT IS NEC ESSARY FOR MANUFACTURE OF GOODS OTHERWISE MANUFACTURED AND VAL IDLY CLEARED ON PAYMENT OF DUTY; (G) STATEMENTS OF BUYERS WITH SOME DETAILS OF ILLIC IT MANUFACTURE AND CLEARANCE; (H) PROOF OF ACTUAL TRANSPORTATION OF GOODS, CLEARE D WITHOUT PAYMENT OF DUTY; (I) LINKS BETWEEN THE DOCUMENTS RECOVERED DURING TH E SEARCH AND ACTIVITIES BEING CARRIED ON IN THE FACTORY OF P RODUCTION; ETC. ITA NOS. 2783 TO 2787/AHD/2015 DCIT VS. BELGIUM GLASS & CERAMICS P LTD ASSESSMENT YEAR: 2005-06 TO 2009-10 PAGE 7 OF 20 NEEDLESS TO SAY, A PRECISE ENUMERATION OF ALL SITUA TIONS IN WHICH ONE COULD HOLD WITH ACTIVITY THAT THERE HAVE BEEN CLAND ESTINE MANUFACTURE AND CLEARANCES, WOULD NOT BE POSSIBLE. AS HELD BY THIS TRIBUNAL AND SUPERIOR COURTS, IT WOULD DEPEND ON THE FACTS OF EACH CASE. WHAT ONE COULD, HOWEVER, SAY WITH SOME CERTAINTY IS THAT INFERENCES CANNOT B E DRAWN ABOUT SUCH CLEARANCES MERELY ON THE BASIS OF NOTE BOOKS OR DIA RIES PRIVATELY MAINTAINED OR ON MERE STATEMENTS OF SOME PERSONS, MAY EVEN BE RESPONSIBLE OFFICIALS OF THE MANUFACTURER OR EVEN OF ITS DIRECTORS/PARTNERS WHO ARE NOT EVEN PERMITTED TO BE CROSS-EXAMINED, AS IN THE PRESENT CASE, WITHO UT ONE OR MORE OF THE EVIDENCES REFERRED TO ABOVE BEING PRESENT. IN FACT, THIS BENCH HAS CONSIDERED SOME OF THE CASE-LAW ON THE SUBJECT IN CENTURIAN LA BORATORIES V. CCE, VADODARA [2013 (293) E.L.T. 689]. IT WOULD APPEAR THAT THE DECISION, THOUGH RENDERED ON 3-5-2013, WAS REPORTED IN THE ISSUE OF THE E.L.T., DATED 29-7- 2013, WHEN THE PRESENT CASE WAS BEING ARGUED BEFORE US, PERHAPS, NOT AVAILABLE TO THE PARTIES. HOWEVER, WE HAVE, IN THAT DECISION, APPLIED THE LAW, AS LAID DOWN IN THE EARLIER CASES, SOME OF WHICH NO W HAVE BEEN PLACED BEFORE US. THE CRUX OF THE DECISION IS THAT RELIANC E ON PRIVATE/INTERNAL RECORDS MAINTAINED FOR INTERNAL CONTROL CANNOT BE THE SOLE BASIS FOR DEMAND. THERE SHOULD BE CORROBORATIVE EVIDENCE BY WAY OF STATEMEN TS OF PURCHASERS, DISTRIBUTORS OR DEALERS, RECORD OF UNACCOUNTED RAW MATERIAL PURCHASED OR CONSUMED AND NOT MERELY THE RECORDING OF CONFESSION AL STATEMENTS. A CO- ORDINATE BENCH OF THIS TRIBUNAL HAS, IN ANOTHER DEC ISION, REPORTED IN THE E.L.T. ISSUE OF 5-8-2013 (AFTER HEARINGS IN THE PRE SENT APPEALS WERE CONCLUDED), ONCE AGAIN REITERATED THE SAME PRINCIPL ES, AFTER CONSIDERING THE ENTIRE CASE-LAW ON THE SUBJECT [HINDUSTAN MACHINES V. CCE [2013 (294) E.L.T. 43]. MEMBERS OF BENCH HAVING HEARING INITIAL LY DIFFERED, THE MATTER WAS REFERRED TO A THIRD MEMBER, WHO HELD THAT CLANDESTI NE MANUFACTURE AND CLEARANCES WERE NOT ESTABLISHED BY THE REVENUE. WE ARE NOT GOING INTO IT IN DETAIL, SINCE THE LEARNED COUNSELS ON EITHER SIDE M AY NOT HAVE HAD THE OPPORTUNITY OF EXAMINING THE DECISION IN THE LIGHT OF THE FACTS OF THE PRESENT CASE. SUFFICE IT TO SAY THAT THE SAID DECISION HAS ALSO TABULATED THE ENTIRE CASE-LAW, INCLUDING MOST OF THE DECISIONS CITED BEF ORE US NOW, CONSIDERED THEM, AND COME TO THE ABOVE CONCLUSION. IN YET ANOT HER DECISION OF A CO- ORDINATE BENCH OF THE TRIBUNAL [PAN PARAG INDIA V. CCE, 2013 (291) E.L.T. 81], IT HAS BEEN HELD THAT THE THEORY OF PREPONDERA NCE OF PROBABILITY WOULD BE APPLICABLE ONLY WHEN THERE ARE STRONG EVIDENCES HEA DING ONLY TO ONE AND ONLY ONE CONCLUSION OF CLANDESTINE ACTIVITIES. THE SAID THEORY, CANNOT BE ADOPTED IN CASES OF WEAK EVIDENCES OF A DOUBTFUL NA TURE. WHERE TO MANUFACTURE HUGE QUANTITIES OF FINAL PRODUCTS THE A SSESSEE REQUIRE ALL THE RAW MATERIALS, THERE SHOULD BE SOME EVIDENCE OF HUG E QUANTITIES OF RAW MATERIALS BEING PURCHASED. THE DEMAND WAS SET ASIDE IN THAT CASE BY THIS TRIBUNAL. 8.3 APPELLANTS HAVE ALSO RELIED, INTER-ALIA, ON THE JUDGMENT OF ALLAHABAD HIGH COURT IN THE CASE OF CCE, MEERUT-I VS. RA CASTINGS PVT. LIMITED [2012 (26) STR 262 (ALL.)], WHICH IS UPHELD BY THE HON'BLE SUPREME COU RT AS REPORTED IN 2011 (269 ELT A108. THE FACTS OF THIS CASE AND THE ORDERS OF THE ALLAHABAD HIGH COURT IS AS FOLLOWS:- [ORDER]- THESE APPEALS UNDER SECTION 35-G OF THE C ENTRAL EXCISE ACT, 1944 (HEREINAFTER REFERRED TO AS THE ACT) ARE AGAINST TH E ORDER OF THE TRIBUNAL DATED 19-6-2008 [2009 (237) E.L.T. 674 (TRI. - DEL.)], BY WHICH THE TRIBUNAL HAS ALLOWED THE APPEALS OF THE RESPONDENTS AND QUASHED THE ORDER PASSED BY THE ADJUDICATING AUTHORITY. 2. THE RESPONDENT NOS. 1 AND 2 WERE INVOLVED IN THE MANUFACTURING OF MS INGOTS AND IN RESPECT THEREOF HAD MAINTAINED THE BO OKS OF ACCOUNT AS PROVIDED UNDER THE CENTRAL EXCISE RULES AND WERE FU RNISHING THE RETURNS AND PAYING THE CENTRAL EXCISE DUTIES. THE SUPERINTENDEN T ISSUED THE SHOW CAUSE NOTICES DATED 1-12-2006 ASKING THE RESPONDENT TO SH OW CAUSE WHY THE DEMAND TOWARDS CENTRAL EXCISE DUTY MAY NOT BE CONFI RMED FOR THE PERIOD FROM 2001-02 TO 2004-05 BY INVOKING THE PROVISO TO SECTI ON 11A(1) OF THE ACT AND WHY THE PENALTY SHOULD NOT BE IMPOSED UNDER RULE 25 (1) OF THE CENTRAL EXCISE RULES, 2002 READ WITH SECTION 11AC OF THE AC T. VARIOUS ALLEGATIONS ITA NOS. 2783 TO 2787/AHD/2015 DCIT VS. BELGIUM GLASS & CERAMICS P LTD ASSESSMENT YEAR: 2005-06 TO 2009-10 PAGE 8 OF 20 HAVE BEEN MADE IN THE SHOW CAUSE NOTICES AND FROM T HE PERUSAL OF THE SHOW CAUSE NOTICES IT APPEARS THAT THE EXCESS PRODUCTION HAS BEEN ESTIMATED ON THE BASIS OF THE HIGHER ELECTRICITY CONSUMPTION. TH E RESPONDENTS FILED THEIR REPLY. THE COMMISSIONER OF CENTRAL EXCISE, MEERUT-I , VIDE ITS ORDER DATED 30- 7-2007 HAS CONFIRMED THE DEMAND AGAINST THE RESPOND ENT NOS. 1 AND 2 AND ALSO IMPOSED THE PENALTY ON THE RESPONDENT NOS. 1 A ND 2 AND ON OTHER RESPONDENTS ALLEGED TO HAVE BEEN INVOLVED IN THE CL ANDESTINE REMOVAL OF THE GOODS. 3. BEING AGGRIEVED BY THE IMPUGNED ORDERS, THE RESP ONDENTS FILED APPEALS BEFORE THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL, NEW DELHI. THE TRIBUNAL OBSERVED THAT IT IS SETTLED PRINCIPLE OF LAW THAT THE ELECTRICITY CONSUMPTION CAN NOT BE THE ONLY FACTOR OR BASIS FOR DETERMINING THE DUTY LIABILITY, THAT TOO ON IMAGINARY BASIS, ESPECIALLY WHEN RULES 173E MANDATORILY REQUIRES THE COMMISSIONER TO PRESCRIBE/FIX NORM FOR ELECTRICITY CONSUMPTION FIRST AND NOTIFY THE SAME TO THE MANUFACTURERS AND THEREAFTER ASCERTAIN THE REASONS FOR DEVIATIONS, IF ANY, TAKING ALSO INTO AC COUNT THE CONSUMPTION OF VARIOUS INPUTS, REQUIREMENTS OF LABOUR, MATERIAL, P OWER SUPPLY AND THE CONDITIONS FOR RUNNING THE PLANT TOGETHER WITH THE ATTENDANT FACTS AND CIRCUMSTANCES. THE TRIBUNAL FURTHER OBSERVED THAT N O EXPERIMENT HAVE BEEN CONDUCTED IN THE FACTORIES OF THE APPELLANTS FOR DE VISING THE CONSUMPTION NORMS OF ELECTRICITY FOR PRODUCING ON MT OF STEEL I NGOTS. TRIBUNAL ALSO OBSERVED THAT THE ELECTRICITY CONSUMPTION VARIES FR OM ONE HEAT TO ANOTHER AND FROM ONE DATE TO ANOTHER AND EVEN FROM ONE HEAT TO ANOTHER WITHIN THE SAME DATE. THEREFORE, NO UNIVERSAL AND UNIFORMLY ACCEPTA BLE STANDARD OF ELECTRICITY CONSUMPTION CAN BE ADOPTED FOR DETERMINING THE EXCI SE DUTY LIABILITY THAT TOO ON THE BASIS OF IMAGINARY PRODUCTION ASSUMED BY THE REVENUE WITH NO OTHER SUPPORTING RECORD, EVIDENCE OR DOCUMENT TO JUSTIFY ITS ALLEGATIONS. THE TRIBUNAL HAS ALSO CONSIDERED THE REPORT OF DR. BATR A, WHICH HAS BEEN RELIED UPON FOR MAKING THE ALLEGATIONS THAT THERE WAS HIGH ER ELECTRICITY CONSUMPTION. IT APPEARS THAT DR. BATRA IN HIS REPORT HAS OBSERVE D THAT FOR THE PRODUCTION OF 1 MT OF STEEL INGOTS, 1046 UNITS ELECTRICITY REQUIR ED. 8.4 IN VIEW OF THE SETTLED PROPOSITION OF LAW LAID DOWN ABOVE, ESTIMATION OF QUANTITY OF GOODS MANUFACTURED AND CLANDESTINE REMO VAL OF GOODS BY THE APPELLANTS CANNOT BE SLAPPED ON THE BASIS OF AVERAGES ARRIVED AND CALCULATED BASED ON NORMS OF GAS CONSUMPTION IN MANUFACTURE OF 1 MT OF FRIT. IT IS RIGHTLY CONTESTED BY THE APPELLANTS THAT FRIT MANUFACTURED IS NOT COVERED BY ANY NOTIFICATION ISSUED UNDER SECTION 3A OF THE CENTRAL EXCISE ACT, 1944 WHERE CO MPOUNDED LEVY HAS BEEN PRESCRIBED AND CAPACITY OF THE UNIT IS REQUIRED TO BE FIXED ON GAS CONSUMPTION BASIS, AS DONE BY THE REVENUE. IT IS OBSERVED THAT REVENU E HAS ATTEMPTED TO ADOPT AN ESTIMATION METHOD FOR DEMANDING DUTY AND PROVING CL ANDESTINE REMOVAL WHICH IS NOT PRESCRIBED BY LAW. 8.5 IN THE CASE OF APPELLANT M/S. WELLSUIT GLASS & CERAMICS PVT. LIMITED - [2014 (304) ELT 618 (TRI. AHMD.)], THIS BENCH REMANDED TH E CASE TO THE ADJUDICATING AUTHORITY TO GET, INTER-ALIA, SOME MORE STUDIES DON E ON THE GAS CONSUMPTION PER METRIC TONNE OF DIFFERENT GRADES. IT HAS BEEN ARGU ED BY THE REVENUE THAT THE STUDIES SUGGESTED BY THE BENCH ARE NOT POSSIBLE NOW AND SUC H STUDIES ARE ALSO NOT POSSIBLE WITH RESPECT TO THE OTHER APPELLANTS. PARA 3.2 AND 6 OF THE ORDER PASSED BY THIS BENCH IN THE CASE OF M/S. WELLSUIT GLASS & CERAMICS LIMITED (SUPRA) ARE REPRODUCED BELOW:- 3.2 WITH REGARD TO CONSUMPTION OF GAS, LEARNED ADV OCATE RELIED UPON THE STATEMENTS OF SHRI BALKRISHNA M. THAKKAR, MANAGING DIRECTOR, THAT THE CONSUMPTION OF GAS WOULD VARY ON THE QUALITY OF FRI T, RAW MATERIAL USED, CONDITION OF KILN, GAS PRESSURE, FLUXES USED, ETC. IT WAS THUS ARGUED THAT THERE ARE VARIOUS FACTORS WHICH AFFECT THE CONSUMPTION OF GAS AND THERE CANNOT BE A FIXED RATIO OF CONSUMPTION OF GAS FOR A SPECIFIC FRIT OUTPUT. HE ALSO ARGUED THAT IN OCTOBER, 2007, THERE WAS A CHANGE IN THE MA NAGEMENT AND THE NEW MANAGEMENT TOOK A SERIES OF STEPS TO IMPROVE QUALIT Y OF FRIT AND MADE THE GAS CONSUMPTION EFFICIENT. THEY ALSO INSTALLED THRE E NEW REFRACTORY KILN WITH GREATER PRODUCTION CAPACITY AND USED SUPERIOR REFRA CTORIES WHICH WERE BETTER ITA NOS. 2783 TO 2787/AHD/2015 DCIT VS. BELGIUM GLASS & CERAMICS P LTD ASSESSMENT YEAR: 2005-06 TO 2009-10 PAGE 9 OF 20 MAINTAINED FROM TIME TO TIME. HE DREW ATTENTION OF THE BENCH TO THE FACT THAT SERVICES OF A CERAMIC CONSULTANT WAS ENGAGED TO GET BETTER YIELD. HE RELIED UPON THE SUBMISSIONS AND RECORDS TO SHOW THE PURCHA SE OF NEW KILN AND GENERATING SET. IT WAS DUE TO THESE EFFORTS THAT TH E RATIO OF GAS CONSUMPTION FROM 2008-09 ONWARDS WENT DOWN FROM 844 SCM/MT TO 2 86 SCM/MT AS INDICATED IN PARA 13.2 OF ORDER-IN-ORIGINAL DATED 1 0-5-2011. THAT BEFORE 2008 THERE WAS NO GENERATOR AVAILABLE WITH APPELLANT AND EVERY TIME THERE WAS A POWER FAILURE, LARGE QUANTITIES OF GAS WAS USED IN RE-FIRING THE KILN. HE PRODUCED DOCUMENTS RELATING TO INSTALLATION OF DG S ET. HE REFERRED TO THE PURCHASE BILLS TO SHOW SUPERIOR QUALITY OF REFRACTO RIES REPLACED IN THE KILNS AFTER 2008-09. HE ARGUED THAT AS PER THE STATEMENT OF SHRI BALKRISHNA THAKKAR HIMSELF, WHICH IS RECORDED BY THE DEPARTMEN T, THERE CANNOT BE ANY FIXED RATIO OF GAS CONSUMPTION AND THAT AFTER THE N EW MANAGEMENT TOOK OVER, THEY HAVE IMPROVED THE EFFICIENCY OF THE UNIT AND T HAT MERE GAS CONSUMPTION CANNOT BE USED AS A FACTOR FOR CLANDESTINE MANUFACT URE AND REMOVAL. HE EXPLAINED THAT FRIT CONSISTS OF TWO COMPONENTS I.E. GLASS AND SILICONE DIOXIDE. THAT THE MELTING POINT OF GLASS IS VERY HIGH AND OT HER MATERIALS CALLED FLUXES ARE ADDED, AS PER EXPERT CONSULTATIONS, TO LOWER ME LTING POINT SUCH AS BORAX, BORIC ACID AND ZINC OXIDE, ETC. THAT WHEN FLUXES AR E USED, THE MELTING POINT REQUIRED FOR MANUFACTURE OF FRIT IS REDUCED. LEARNE D ADVOCATE REFERRED TO EXTRACTS FROM THE BOOK, INDUSTRIAL CERAMICS BY FELI X SINGER AND THE BOOK GLASSING AND DECORATION OF CERAMICS TILES BY AUTORI VARI AND EXTRACTS FROM THE JOURNAL. CERAMIC INDUSTRY, JANUARY, 2000 AS WEL L AS VARIOUS EXTRACTS DOWNLOADED FROM INTERNET TO SUPPORT HIS CASE. HE RE FERRED TO THE FOLLOWING DECISIONS TO SUBMIT THAT GAS CONSUMPTION ALONE CANN OT BE THE SOLE BASIS OF CLANDESTINE MANUFACTURE AND REMOVAL OF THE FINISHED PRODUCT :- (I) VISHWA TRADERS PVT. LIMITED V. CCE- [2012 (278 ) E.L.T. 362] (II) CCE V. VISHWA TRADERS PVT. LIMITED - [2013 (28 7) E.L.T. 243] (III) MUKESH DYE WORK V. CCE - [2006 (196) E.L.T. 237] (IV) SOUTHERN ISPAT LIMITED V. CCE - [2009 (248) E .L.T. 270] (V) SVM CERA TEA LIMITED V. CCE - [2013 (292) E.L.T . 580] 4 .. 5 .. 6. ON THE ISSUE OF CLANDESTINE REMOVAL OF FRIT, BAS ED ON THE GAS CONSUMPTION OF THE MAIN APPELLANT, IT IS OBSERVED F ROM PARA 13.2 OF THE ORDER- IN-ORIGINAL DATED 10-5-2011 THAT RECORDS MAINTAINED BY MAIN APPELLANT SHOW THE GAS CONSUMPTION FOR MAKING 1 MT OF FRIT FROM 84 4 SCM TO 286 SCM. IT HAS BEEN CONTESTED BY THE APPELLANT THAT GAS CONSUM PTION VARIED FROM SEASON TO SEASON, FROM ONE QUALITY OF FRIT TO OTHER QUALITY OF FRIT, USE OF BETTER TECHNOLOGY, ETC. IT HAS ALSO BEEN BROUGHT ON RECORD THAT AFTER CHANGE IN THE MANAGEMENT IN OCT., 2007 AND INSTALLATION OF NEW FU RNACES AND NEW REFRACTORIES, THE GAS CONSUMPTION HAS REDUCED. FURT HER APPELLANT HAS ALSO BROUGHT ON RECORD THAT DUE TO EXPERT CONSULTATIONS AND USE OF CERTAIN FLUXES ALSO THE GAS CONSUMPTIONS PER MT OF FRIT HAVE COME DOWN. EVIDENCES WERE ALSO BROUGHT ON RECORD DURING THE COURSE OF HEARING REGARDING INSTALLATION OF AN ELECTRICITY GENERATOR AND REPLACEMENT OF BETTER QUALITY REFRACTORIES IN THE KILNS BY THE MAIN APPELLANT. UNDER THE ABOVE FACTUA L MATRIX, THE METHOD USED BY THE INVESTIGATION CANNOT BE A SOUND METHOD TO DE MAND DUTY ON ASSUMING 318 SCM OF GAS REQUIRED FOR MANUFACTURING ONE MT OF ANY QUALITY OF FRIT. THE IMPROPER METHOD ADOPTED BY THE REVENUE FOR CALCULAT ING DUTY WAS AGITATED BY THE APPELLANTS BEFORE THE ADJUDICATING AUTHORITY AS PER PARA 4(XI) TO (XXXIII) OF THE ORDER-IN-ORIGINAL DATED 10-5-2011. IT IS OBS ERVED THAT DURING CONDUCTING OF GAS CONSUMPTION STUDIES ON 23/24-2-2010 BY INVES TIGATION ONLY FRIT PRODUCT CODE OP 202WAS BEING MANUFACTURED. IT HAS BEEN CONT ESTED BY THE APPELLANT THAT DIFFERENT FRIT PRODUCT CODES MAY CONSUME DIFFE RENT QUANTITIES OF GAS. AS ITA NOS. 2783 TO 2787/AHD/2015 DCIT VS. BELGIUM GLASS & CERAMICS P LTD ASSESSMENT YEAR: 2005-06 TO 2009-10 PAGE 10 OF 20 THE APPELLANT IS NOT UNDERTAKING THE MANUFACTURE OF ONE STANDARD PRODUCT, IN THE INTEREST OF JUSTICE, IT WILL BE APPROPRIATE TO CONDUCT A FEW MORE REPRESENTATIVE STUDIES OF DIFFERENT FRIT PRODUCT CO DES IN ORDER TO ARRIVE AT A MORE REALISTIC GAS CONSUMPTION PMT OF FRIT MANUFACT URED. 8.6 IN VIEW OF THE ABOVE OBSERVATIONS MADE BY THIS BENCH IT HAS ALREADY BEEN HELD THAT METHOD ADOPTED BY THE INVESTIGATION TO ES TIMATE CLANDESTINE REMOVAL OF FINISHED GOODS IS NOT SOUND AND HAS TO BE DISCARDED . HOWEVER, REVENUE WAS GIVEN AN OPPORTUNITY TO STRENGTHEN THEIR CASE BY CORROBOR ATING EVIDENCE WITH SOME MORE FACTUAL DATA FROM ADDITIONAL STUDIES. NO APPEAL HA S BEEN FILED BY THE REVENUE AGAINST THE ABOVE ORDER PASSED BY THIS BENCH. IT I S ALSO OBSERVED FROM 3.2 OF THE REMAND ORDER THAT APPELLANT HAS MADE CERTAIN CHANGE S IN THE PLANT AND MACHINERY AND OTHER METHODOLOGIES TO REDUCE GAS CONSUMPTION. EVEN IN THE REMAND PROCEEDINGS ALSO ADJUDICATING AUTHORITY HAS NOT COU NTERED THE ARGUMENTS TAKEN BY THE APPELLANT AS TO WHY THE STEPS TAKEN BY THEM FRO M TIME TO TIME, DOES NOT EFFECT GAS CONSUMPTION. ON A SPECIFIC QUERY FROM THE BENCH, T HE LEARNED SENIOR ADVOCATE ALSO ARGUED THAT SIMILAR MODERNIZATION IN PROCESSES OF M ANUFACTURE, AS UNDERTAKEN BY M/S. WELLSUIT GLASS IN THE MANUFACTURE OF FRIT, HAV E ALSO BEEN UNDERTAKEN BY OTHER APPELLANTS. NO FINDINGS HAVE BEEN GIVEN BY THE ADJ UDICATING AUTHORITIES IN COUNTERING THE CLAIMS OF THE APPELLANTS, JUSTIFYING THE MODERN IZATION DONE TO REDUCE CONSUMPTION OF GAS FROM TIME TO TIME. NO EXPERT OPINION HAS BE EN OBTAINED BY THE REVENUE TO CHALLENGE THE GAS CONSUMPTION PATTERN ADOPTED BY TH E APPELLANTS TO INDICATE THAT CLAIM OF THE APPELLANTS WAS WRONG. 8. IN VIEW OF THE ABOVE OBSERVATIONS AND JUDICIAL P RONOUNCEMENTS, METHODOLOGY ADOPTED BY THE ADJUDICATING AUTHORITIES IN ESTIMATI NG AND DEMANDING DUTY FROM THE APPELLANTS; BASED ON CONSUMPTION OF NATURAL GAS, EL ECTRICITY CONSUMED AND PACKING TIME TAKEN; IS NOT ACCEPTABLE AND IS REQUIRED TO BE REJECTED. 9. SO FAR AS POINTS MENTIONED AT PARA 6(II) AND 6(I II) ARE CONCERNED, IT HAS BEEN HELD BY THE ADJUDICATING AUTHORITIES THAT UNDERVALU ATION AND CLANDESTINE REMOVAL STAND PROVIDED IN VIEW OF THE PEN-DRIVES, AJTAK XYZ OF SANYO, PERSONAL LEDGER OF COMET, PRIVATE DIARIES/ WRITING PADS AND THE STATEM ENTS OF CERAMIC TILE MANUFACTURERS. APPELLANTS HAVE ARGUED THAT THE PRINT-OUT TAKEN FRO M THE PEN-DRIVE AJTAK XYZ ARE NOT ADMISSIBLE AS A PIECE OF EVIDENCE AS THE SAME A RE NOT THE DOCUMENTS ADMISSIBLE AS EVIDENCE UNDER THE RELEVANT SECTION OF THE CENTR AL EXCISE ACT, 1944. IT WAS ALSO ARGUED BY THE APPELLANTS THAT THE NUMBER OF PANCHNA MAS RECORDED AND THE OPENING OF THE SAID PEN-DRIVE CLEARLY SUGGEST THAT THE DATA RECOVERED FROM THE PEN-DRIVE IS HIGHLY OBJECTIONABLE, SUSPICIOUS AND NOT ACCEPTABLE . IT IS OBSERVED FROM THE CASE RECORDS OF WELLSUIT GLASS & CERAMIC PVT. LIMITED [E /13720/2014] THAT SEIZURE OF THE SAID PEN-DRIVE WAS EFFECTED ON 17.7.2008 UNDER A PA NCHNAMA AND IT WAS NOT STATED IN THIS PANCHNAMA THAT THE PEN-DRIVE WAS PUT INSIDE A SEALED COVER. IT HAS BEEN ADMITTED BY SHRI V.N. THAKKAR (SUPERINTENDENT) DGCE I IN THE CROSS-EXAMINATION BEFORE THE ADJUDICATING AUTHORITY THAT WHEN AN ARTI CLE IS SEIZED, THE SAME IS PLACED IN A SEALED COVER AND MENTION OF THE SAME IS MADE IN T HE PANCHNAMA. IT IS ALSO ADMITTED BY SHRI THAKKAR THAT AS HE REMEMBERS THE S EIZED PEN-DRIVE WAS PLACED IN A PAPER COVER AND SEALED WITH ADHESIVE TAPES. IT IS THE CLAIM OF THE APPELLANTS THAT THE WAY THE SAID PEN-DRIVE WAS HANDLED, IT IS POSSIBLE THAT THE SAME COULD BE TEMPERED WITH AS THE SAME WAS KEPT IN THE PAPER COVER SEALED WITH ADHESIVE TAPES. A SECOND PANCHNAMA WAS MADE ON 30.8.2008 WHERE THE SAID PEN- DRIVE WAS MENTIONED TO HAVE BEEN TAKEN OUT OF A SEALED COVER WHEN THE FIRS T PANCHNAMA NEVER MENTIONED KEEPING THE SAID PEN-DRIVE IN A SEALED COVER. IT I S ALSO OBSERVED THAT ON 30.8.2008 THE SEALED COVER WAS OPENED BUT CONTENTS OF THE SIL VER PEN-DRIVE WERE NOT OPENED ON 30.8.3008 BUT INSTEAD ANOTHER BLACK COLOUR PEN-DRIV E WAS OPENED. ON 06.9.2008 UNDER A PANCHNAMA THE SAID SILVER PEN-DRIVE TAKEN O UT OF THE SEALED COVER AND ON OPENING THIS PEN DRIVE IN THE TALLY FOLDER, NO DATA WAS FOUND TO BE AVAILABLE. HOWEVER, UNDER ANOTHER PANCHNAMA DATED 12.09.2008, WHEN THE SAID SILVER PEN- DRIVE WAS OPENED DATA WAS FOUND IN TALLY FOLDER WHI CH IS THE RELIED UPON AS AAJTAK XYZ. THERE IS A STRONG FORCE IN THE ARGUMENTS MADE BY THE APPELLANTS THAT WHEN NO DATA WAS FOUND IN TALLY FOLDER ON 06.9.2008, HOW TH E RELIED UPON DOCUMENTS GOT GENERATED ON 12.09.2008. SHRI V.N. THAKKAR, SUPERI NTENDENT IN HIS CROSS- EXAMINATION EXPLAINED THE REASON FOR NON RETRIEVAL OF DATA ON 06.9.2008 TO BE DUE TO OPERATIONAL LACK, BUT HE ADMITTED THAT NO MENTION O F ANY OPERATIONAL LACK IS MADE IN ITA NOS. 2783 TO 2787/AHD/2015 DCIT VS. BELGIUM GLASS & CERAMICS P LTD ASSESSMENT YEAR: 2005-06 TO 2009-10 PAGE 11 OF 20 THE PANCHNAMA DATED 06.9.2008. FURTHER, IT IS OBSE RVED THAT IN PANCHNAMA DATED 12.09.2008, THE PRINT OUT OF ACCOUNT AJTAK TAKEN CO NTAINED 52 PAGES AND ACCOUNT OF APPELLANT WELLSUIT APPEARED AT PAGE 30 OUT OF 52 PA GES. ANOTHER PANCHNAMA DATED 24.09.2008 INDICATE IN ANNEXURE A3 THAT THE NUMBER OF PAGES OF ACCOUNT AAJTAKWERE 94 AND THE NAME OF APPELLANT EXISTED AT PAGE 43 AS AGAINST PAGE 30 MENTIONED IN PANCHNAMA DATED 12.09.2008. APPELLANTS HAVE ALSO R AISED THE ISSUE REGARDING DISCREPANCIES IN THE NAME OF THE PANCH WITNESSES. IT IS ALSO CONTENDED THAT REVENUE HAD NOT FOLLOWED THE PROCEDURE AS STIPULATED IN SEC TION 36B OF THE CENTRAL EXCISE ACT, 1944. IN VIEW OF THE ABOVE DISCREPANCIES THE AUTHEN TICITY AND VERACITY OF DATA RETRIEVED BY INVESTIGATION FROM THE SILVER PEN-DRIV E IS NOT RELIABLE AND CAN NOT BE ACCEPTED AS A PIECE OF EVIDENCE IN DECIDING THE CAS E OF UNDERVALUATION AND CLANDESTINE REMOVAL AGAINST THE PRESENT APPELLANTS WITH RESPECT TO POINT MENTIONED IN PARA 6 (II). 10. SO FAR AS THE QUESTION MENTIONED AT PARA 6(III) REGARDING DENYING CROSS- EXAMINATION OF WITNESSES WHOSE STATEMENTS WERE USED FOR ESTABLISHING UNDERVALUATION/ CLANDESTINE REMOVAL OF FRIT BASED O N THE PRIVATE RECORDS, THE STATEMENTS OF TILE MANUFACTURERS AND SHROFF/ ANGADI AS IS CONCERNED; IT IS ARGUED BY THE APPELLANTS THAT THE ENTIRE EXERCISE OF SUCH QUA NTIFICATION HAS BEEN MADE AS PER THE STATEMENTS OF THE WITNESSES WHOSE CROSS-EXAMINA TION HAS NOT BEEN ALLOWED BY THE ADJUDICATING AUTHORITY AS PER SECTION 9D OF THE CENTRAL EXCISE ACT, 1944. APPELLANTS RELIED UPON THE FOLLOWING CASE LAWS:- (I) J.K. CIGARETTES LIMITED VS. CCE [2009 (242) ELT 189 (DEL.)] (II) CCE, ALLAHABAD VS. GOVIND MILLS LIMITED - [20 13 (294) ELT 361 (ALL.)] (III) BASUDEV GARG VS. CC [2013 (294) ELT 353 (DEL. )] (IV) SWIBER OFFSHORE CONSTRUCTION PVT. LIMITED VS. COMMISSIONER OF CUSTOMS, KANDLA [2014 (301) ELT 119 (TRI. AHMD.)] 10.1 SECTION 9D OF THE CENTRAL EXCISE ACT, 1944 IS REPRODUCED BELOW:- 9-D. RELEVANCY OF STATEMENTS UNDER CERTAIN CIRCUMST ANCES (1) A STATEMENT MADE AND SIGNED BY A PERSON BEFORE ANY CENTRAL EXCISE OFFICER OF A GAZETTED RANK DURING THE COURSE OF ANY INQUIRY OR PROCEEDING UNDER THIS ACT SHALL BE RELEVANT, FOR THE PURPOSE O F PROVING, IN ANY PROSECUTION FOR AN OFFENCE UNDER THIS ACT, THE TRUTH OF THE FAC TS WHICH IT CONTAINS, - (A) WHEN THE PERSON WHO MADE THE STATEMENT IS DEAD OR CANNOT BE FOUND, OR IS INCAPABLE OF GIVING EVIDENCE, OR IS KEPT OUT OF THE WAY BY THE ADVERSE PARTY, OR WHOSE PRESENCE CANNOT BE O BTAINED WITHOUT AN AMOUNT OF DELAY OR EXPENSE WHICH, UNDER THE CIRC UMSTANCES OF THE CASE, THE COURT CONSIDERS UNREASONABLE; OR (B) WHEN THE PERSON WHO MADE THE STATEMENT IS EXA MINED AS A WITNESS IN THE CASE BEFORE THE COURT AND THE COURT IS OF THE OPINION THAT, HAVING REGARD TO THE CIRCUMSTANCES OF THE CAS E, THE STATEMENT SHOULD BE ADMITTED IN EVIDENCE IN THE INTERESTS OF JUSTICE. (2) THE PROVISIONS OF SUB-SECTION (1) SHALL, SO FAR AS MAY BE, APPLY IN RELATION TO ANY PROCEEDINGS UNDER THIS ACT, OTHER T HAN A PROCEEDING BEFORE A COURT, AS THEY APPLY IN RELATION TO A PROCEEDING BE FORE A COURT. 10.2 IN THE CASE OF J.K. CIGARETTES LIMITED VS. CCE (SUPRA), FOLLOWING CONCLUSIONS WERE DRAWN BY THE DELHI HIGH COURT, IN PARA 32:- 32. THUS, WE SUMMARIZE OUR CONCLUSIONS AS UNDER:- (I) WE ARE OF THE OPINION THAT THE PROVISIONS OF SE CTION 9D (2) OF THE ACT ARE NOT UNCONSTITUTIONAL OR ULTRA VIRES; ITA NOS. 2783 TO 2787/AHD/2015 DCIT VS. BELGIUM GLASS & CERAMICS P LTD ASSESSMENT YEAR: 2005-06 TO 2009-10 PAGE 12 OF 20 (II) WHILE INVOKING SECTION 9D OF THE ACT, THE CONC ERNED AUTHORITY IS TO FORM AN OPINION ON THE BASIS OF MATERIAL ON RECORD THAT A PARTICULAR GROUND, AS STIPULATED IN THE SAID SECTION, EXISTS A ND IS ESTABLISHED; (III) SUCH AN OPINION HAS TO BE SUPPORTED WITH REAS ONS; (IV) BEFORE ARRIVING AT THIS OPINION, THE AUTHORITY WOULD GIVE OPPORTUNITY TO THE AFFECTED PARTY TO MAKE SUBMISSIONS ON THE AVAIL ABLE MATERIAL ON THE BASIS OF WHICH THE AUTHORITY INTENDS TO ARRIVE AT THE SAID OPINION; AND (V) IT IS ALWAYS OPEN TO THE AFFECTED PARTY TO CHAL LENGE THE INVOCATION OF PROVISIONS OF SECTION 9D OF THE ACT IN A PARTICULAR CASE BY FILING STATUTORY APPEAL, WHICH PROVIDES FOR JUDICIAL REVIE W. 10.3 IN THE ADJUDICATING PROCEEDINGS, A LIST OF WIT NESSES TO BE RELIED UPON BY THE REVENUE IS DISCLOSED TO THE APPELLANTSALONGWITH THE SHOW CAUSE NOTICE. THE REASONS FOR RELYING UPON THE STATEMENTS ARE ALSO AVAILABLE FROM THE FACTS NARRATED IN THE SHOW CAUSE NOTICE. IT IS NOT NECESSARY THAT ALL THE WIT NESSES SHOULD BE CALLED BY THE ADJUDICATING AUTHORITY SUO-MOTO FOR EXAMINATION IN A QUASI-JUDICIAL PROCEEDINGS FOR CROSS-EXAMINATION. HOWEVER, AS PER THE PROVISIONS OF SECTION 9D (1)(B) OF THE CENTRAL EXCISE ACT, 1944, READ WITH THE JUDICIAL PR ONOUNCEMENTS RELIED UPON BY THE APPELLANT EVERY ADJUDICATING AUTHORITY SHOULD CALL THE WITNESSES WHEN REQUESTED BY THE PARTY AGAINST WHOM THOSE STATEMENTS ARE TO BE U SED. IF BY MAKING EFFORTS FOR A FEW OCCASIONS THE WITNESSES SUMMONED DO NOT APPEAR THAN AUTOMATICALLY THE CASE COULD BE MATURE FOR ACCEPTING THE STATEMENTS AS ADM ISSIBLE EVIDENCES UNDER SECTION 9(D)(1)(A) OF THE CENTRAL EXCISE ACT, 1944. HOWEVE R, IT WAS NOT OPEN TO THE ADJUDICATING AUTHORITIES TO STRAIGHTAWAY REJECT THE REQUEST FOR CROSS-EXAMINATION IN VIEW OF THE LAW LAID DOWN BY THE JUDICIAL PRONOUNCE MENTS RELIED UPON BY THE APPELLANTS. THE REASONS FOR REJECTING THE APPELLAN TS REQUEST FOR NOT ALLOWING ARE ALSO REQUIRED TO BE INTIMATED TO THE APPELLANTS AS PER T HE CASE LAW OF J.K. CIGARETTES LIMITED (SUPRA) SO THAT APPELLANT MAY EXPLORE THE P OSSIBILITY OF FILING APPEAL AGAINST SUCH REJECTIONS. THE RATIO LAID DOWN BY THE J.K. C IGARETTES CASE (SUPRA) HAS ALSO BEEN FOLLOWED IN SERIES OF OTHER JUDGMENTS. NO SUC H REJECTION ORDERS WERE GIVEN BY THE ADJUDICATING AUTHORITIES SEPARATELY. HON'BLE S UPREME COURT IN THE CASE OF UOI &ANR.VS. GTC INDIA AND ORS IN ORDER DATED 03.01.19 95 ARISING OUT OF SLP (C) NO. 218131/1994 HAS ALREADY LAID THE FOLLOWING RATIO: SPECIAL LEAVE GRANTED. HEARD. THE IMPUGNED ORDER DATED 05.9.94 HAS TO BE READ ALO NGWITH SECTION 9D OF THE CENTRAL EXCISE AND SALT ACT, 1944. SO READ, TH ERE IS NO INFIRMITY IN THE IMPUGNED ORDER. IT MAY, HOWEVER, BE CLARIFIED THAT IN CASE RELIANCE IS PLACED ON THE PROVISIONS OF SECTION 9D OF THE ACT IN RESPECT OF ANY PARTICUL AR WITNESS, INTIMATION OF THE SAME IS REQUIRED TO BE GIVEN TO THE RESPONDENTS AND IT WOULD BE OPEN TO THE RESPONDENTS TO APPROACH THE HIGH COURT AGAINST THE ORDER MADE BY THE AUTHORITY IN THAT BEHALF. THAT APPEAL IS DISPOSED OF IN THESE TERMS. NO COS TS. FURTHER IN PARA 16 AND 19 OF CASE LAW A.TAJUDEEN VS . UOI[2015 (317) ELT 177 (SC)] APEX COURT VERY RECENTLY HELD AS FOLLOWS ON ADMISSIBILITY OF STATEMENTS AND CROSS-EXAMINATION:- 16. HAVING GIVEN OUR THOUGHTFUL CONSIDERATION TO T HE AFORESAID ISSUE, WE ARE OF THE VIEW THAT THE STATEMENTS DATED 25-10-198 9 AND 26-10-1989 CAN UNDER NO CIRCUMSTANCES CONSTITUTE THE SOLE BASIS FO R RECORDING THE FINDING OF GUILT AGAINST THE APPELLANT. IF FINDINGS COULD BE R ETURNED BY EXCLUSIVELY RELYING ON SUCH ORAL STATEMENTS, SUCH STATEMENTS COULD EASI LY BE THRUST UPON THE PERSONS WHO WERE BEING PROCEEDED AGAINST ON ACCOUNT OF THEIR ACTIONS IN ITA NOS. 2783 TO 2787/AHD/2015 DCIT VS. BELGIUM GLASS & CERAMICS P LTD ASSESSMENT YEAR: 2005-06 TO 2009-10 PAGE 13 OF 20 CONFLICT WITH THE PROVISIONS OF THE 1973 ACT. SUCH STATEMENTS OUGHT NOT TO BE READILY BELIEVABLE, UNLESS THERE IS INDEPENDENT COR ROBORATION OF CERTAIN MATERIAL ASPECTS OF THE SAID STATEMENTS, THROUGH IN DEPENDENT SOURCES. THE NATURE OF THE CORROBORATION REQUIRED, WOULD DEPEND ON THE FACTS OF EACH CASE. IN THE PRESENT CASE, IT IS APPARENT THAT THE APPELL ANT - A. TAJUDEEN AND HIS WIFE T. SAHIRABANU AT THE FIRST OPPORTUNITY RESILED FROM THE STATEMENTS WHICH ARE NOW SOUGHT TO BE RELIED UPON BY THE ENFORCEMENT DIRECTORATE, TO SUBSTANTIATE THE CHARGES LEVELLED AGAINST THE APPEL LANT. WE SHALL NOW ENDEAVOUR TO EXAMINE WHETHER THERE IS ANY INDEPENDE NT CORROBORATIVE EVIDENCE TO SUPPORT THE ABOVE STATEMENTS. 17 &18 .. .. 19. WE SHALL NOW DEAL WITH THE OTHER INDEPENDENT EV IDENCE WHICH WAS SOUGHT TO BE RELIED UPON BY THE ENFORCEMENT DIRECTO RATE TO ESTABLISH THE CHARGES LEVELLED AGAINST THE APPELLANT. AND BASED T HEREON, WE SHALL DETERMINE WHETHER THE SAME IS SUFFICIENT ON ITS OWN , OR IN CONJUNCTION TO THE RETRACTED STATEMENTS REFERRED TO ABOVE, IN DECIDING THE PRESENT CONTROVERSY, ONE WAY OR THE OTHER. FIRST AND FOREMOST, RELIANCE WAS PLACED ON MAHAZAR EXECUTED (AT THE TIME OF THE RECOVERY, FROM THE RES IDENCE OF THE APPELLANT) ON 25-10-1989. IT WOULD BE PERTINENT TO MENTION, THAT THE APPELLANT IN HIS RESPONSE TO THE MEMORANDUM DATED 12-3-1990 HAD EXPR ESSLY REFUTED THE AUTHENTICITY OF THE MAHAZAR EXECUTED ON 25-10-1989. MERELY BECAUSE THE MAHAZAR WAS ATTESTED BY TWO INDEPENDENT WITNESSES, NAMELY, R.M. SUBRAMANIAN AND HAYADBASHA, WOULD NOT LED CREDIBILI TY TO THE SAME. SUCH CREDIBILITY WOULD ATTACH TO THE MAHAZAR ONLY IF THE SAID TWO INDEPENDENT WITNESSES WERE PRODUCED AS WITNESSES, AND THE APPEL LANT WAS AFFORDED AN OPPORTUNITY TO CROSS-EXAMINE THEM. THE AFORESAID PR OCEDURE WAS UNFORTUNATELY NOT ADOPTED IN THIS CASE. BUT THEN, W OULD THE PREPARATION OF THE MAHAZARAND THE FACTUM OF RECOVERY OF A SUM OF RS. 8 ,24,900/- ESTABLISH THE GUILT OF THE APPELLANT, INSOFAR AS THE VIOLATION OF SECTION 9(1)(B) OF THE 1973 ACT IS CONCERNED? IN OUR CONSIDERED VIEW, EVEN IF T HE MAHAZARIS ACCEPTED AS VALID AND GENUINE, THE SAME IS WHOLLY INSUFFICIENT TO ESTABLISH, THAT THE AMOUNT RECOVERED FROM THE RESIDENCE OF THE APPELLAN T WAS DISPATCHED BY ABDUL HAMEED, A RESIDENT OF SINGAPORE, THROUGH A PE RSON WHO IS NOT AN AUTHORISED DEALER IN FOREIGN EXCHANGE. EVEN, IN RES PONSE TO THE MEMORANDUM DATED 12-3-1990, THE APPELLANT HAD ACKNO WLEDGED THE RECOVERY OF RS. 8,24,900/- FROM HIS RESIDENCE, BUT THAT ACKNOWLEDGMENT WOULD NOT ESTABLISH THE VIOLATION OF SECTION 9(1)(B ) OF THE 1973 ACT. IN THE ABOVE VIEW OF THE MATTER, WE ARE OF THE OPINION THA T THE EXECUTION OF THE MAHAZARON 25-10-1989, IS INCONSEQUENTIAL FOR THE DE TERMINATION OF THE GUILT OF THE APPELLANT IN THIS CASE. IN VIEW OF THE ABOVE, BY NOT ALLOWING THE CROSS-EXA MINATION OF THE RELIED UPON WITNESSES UNDER SECTION 9D OF THE CENTRAL EXCISE AC T, 1944, THE EVIDENTIARY VALUE OF SUCH STATEMENTS DOES NOT SURVIVE AND IS REQUIRED TO BE DISCARDED. WE ACCORDINGLY HOLD SO. 11. IT IS ALSO THE CASE OF THE APPELLANTS THAT ALL THE TRANSACTIONS ARE MADE BY THE APPELLANTS AT THE FACTORY GATE. THAT ONLY EXACT AM OUNT OF ADDITIONAL CONSIDERATION RECEIVED BY EACH APPELLANT HAS TO BE ADDED TO THE T RANSACTION VALUE AND THAT NO SUCH QUANTIFICATION HAS BEEN DONE BY THE REVENUE WHICH C OULD BE ATTRIBUTED TO EACH MANUFACTURER. THAT REVENUE CAN NOT ADOPT ANY BEST JUDGMENT VALUATION METHOD AS SUGGESTED IN CENTRAL EXCISE VALUATION RULES EVEN IF ALL THE STATEMENTS/ DOCUMENTS RELIED UPON BY THE REVENUE ARE PRESUMED TO BE CORRE CT ADMISSIBLE AS EVIDENCES. 12. BEFORE GIVING OBSERVATIONS ON THIS ARGUMENT RAI SED BY THE APPELLANTS, IT WILL BE RELEVANT TO GLANCE THROUGH THE RELEVANT PORTION OF THE PROVISIONS OF SECTION 4 OF THE CENTRAL EXCISE ACT, 1944 ALONGWITH DEFINITION OF TR ANSACTION VALUE:- 4. VALUATION OF EXCISABLE GOODS FOR PURPOSES OF CH ARGING OF DUTY OF EXCISE. ITA NOS. 2783 TO 2787/AHD/2015 DCIT VS. BELGIUM GLASS & CERAMICS P LTD ASSESSMENT YEAR: 2005-06 TO 2009-10 PAGE 14 OF 20 (1) WHERE UNDER THIS ACT, THE DUTY OF EXCISE IS CHA RGEABLE ON ANY EXCISABLE GOODS WITH REFERENCE TO VALUE, THEN, ON EACH REMOV AL OF THE GOODS, SUCH VALUE SHALL - (A) IN A CASE WHERE THE GOODS ARE SOLD BY THE ASSES SEE, FOR DELIVERY AT THE TIME AND PLACE OF THE REMOVAL, THE ASSESSEE AND THE BUYER OF THE GOODS ARE NOT RELATED AND THE PRICE IS THE SOLE CONSIDERATION FOR THE SALE, BE THE TRANSACTION VALUE; (B) IN ANY OTHER CASE, INCLUDING THE CASE WHERE TH E GOODS ARE OT SOLD, BE THE VALUE DETERMINED IN SUCH MANNER AS MAY BE PRESCRIBE D. (2) . (3) . (A) . (B) . (D) TRANSACTION VALUEMEANS THE PRICE ACTUALLY PAID OR PAYABLE FOR THE GOODS, WHEN SOLD, AND INCLUDES IN ADDITION TO THE A MOUNT CHARGED AS PRICE, ANY AMOUNT THAT THE BUYER IS LIABLE TO PAY TO , OR ON BEHALF OF, THE ASSESSEE, BY REASON OF, OR IN CONNECTION WITH THE SALE, WHETH ER PAYABLE AT THE TIME OF THE SALE OR AT ANY OTHER TIME, INCLUDING, BUT NOT L IMITED TO, ANY AMOUNT CHARGED FOR, OR TO MAKE PROVISION FOR, ADVERTISE OR PUBLICITY, MARKETING AND SELLING ORGANISATION EXPENSES, STORAGE, OUTWARD HAN DLING, SERVICING, WARRANTY, COMMISSION OR ANY OTHER MATTER; BUT DOES NOT INCLUDE THE AMOUNT OF DUTY OF EXCISE, SALES TAX AND OTHER TAXES, IF ANY, ACTUALLY PAID OR ACTUALLY PAYABLE ON SUCH GOODS. 13. IT IS NOT THE CASE OF THE REVENUE THAT THE VALU E OF THE GOODS CLEARED BY THE APPELLANTS IS NOT DETERMINABLE AT THE FACTORY GATE AND THEREFORE, SOME OTHER METHOD UNDER THE CENTRAL EXCISE VALUATION RULES IS REQUIRE D TO BE ADOPTED TO ARRIVE AT THE ASSESSABLE VALUE. RATHER THE CASE OF THE REVENUE O N VALUATION IS THAT CERTAIN ADDITIONAL CONSIDERATION COMING TO THE APPELLANT BY WAY OF CASH FLOW FROM THE TILE MANUFACTURERS TO THE FRIT MANUFACTURERS IS REQUIRED TO BE ADDED TO THE ASSESSABLE VALUE. IN THE PRESENT CIRCUMSTANCES AND FACTUAL MA TRIX THE EXACT AMOUNT OF SUCH ADDITIONAL CONSIDERATION WAS REQUIRED TO BE DETERMI NED FOR ADDITION TO THE TRANSACTION VALUE EVEN IF ALL THE STATEMENTS AND DOCUMENTS WERE HELD TO BE ADMISSIBLE EVIDENCE AND SATISFIED THE TEST OF SECTION 9D OF THE CENTRAL EXCISE ACT, 1944. IN APPEAL NOS. E/11960/2013 AND E/12386/2014, THE VALUATION HAS BE EN ENHANCED SOLELY BASED ON THE ASSUMPTION THAT AFTER BOOKING OF THE CASE THESE APPELLANT ENHANCED THEIR PRICES. IN THE CASE OF TRANSACTION VALUE REALM THE SAME PRO DUCT CAN BE SOLD AT DIFFERENT PRICES AS PER SECTION 4 OF THE CENTRAL EXCISE ACT, 1944 UNLESS ACTUAL ADDITIONAL CONSIDERATION HAS BEEN SHOWN TO HAVE FLOWN BACK TO THE APPELLANTS. APPELLANTS IN THESE APPEALS AND IN APPEAL NOS. E/13720/2014 AND E /534/2011 HAVE ALSO NOT ADMITTED DURING INVESTIGATION THAT THEY HAVE RECEIV ED ANY ADDITIONAL CONSIDERATION. IN OTHER APPEALS ON THE ISSUE OF UNDERVALUATION INVEST IGATION ATTEMPTED TO SHOW THE FLOW BACK OF SUCH ADDITIONAL CASH FLOW THROUGH THE STATE MENTS OF CERAMIC TILE MANUFACTURER AND THE STATEMENTS OF SHROFFS AND ANGADIAS. THE AM OUNT SO WORKED OUT HAS BEEN WORKED OUT TO BE RS. 38,95,860/- AS PER THE STATEME NT OF SHRI JAYESH PATEL, PROP. OF M/S. KEVEL MENTIONED IN PARA 9.3.3 OF OIO DATED 23. 03.2011 IN THE CASE OF M/S. BELGIUM GLASS & CERAMICS. THIS STATEMENT CLEARLY C ONVEYS THAT AMOUNT OF RS. 38,95,860/- WAS PAID TO VARIOUS FRIT MANUFACTURERS AND AT THE SAME TIME MENTIONS THAT THE NAMES OF THE FRIT MANUFACTURERS ARE NOT WRITTEN AGAINST EACH PAYMENT IN THE CONCERNED DOCUMENTS. UNDER THE ABOVE FACTUAL MATRI X APPELLANTS HAD THE RIGHT TO CROSS-EXAMINATION THE WITNESSES ESPECIALLY SHROFFS AND ANGADIAS AS TO WHAT PORTION OF SUCH PAYMENT BELONGS TO A PARTICULAR APPELLANT. AS MENTIONED IN THE DEFINITION OF TRANSACTION VALUE IN PARA 11.1 ABOVE, ONLY ACTUAL P RICE PAID OR PAYABLE HAS TO BE ADDED TO THE TRANSACTION VALUE AND NOT A HYPOTHETIC AL VALUE BASED ON AVERAGING OF PRICES OR STANDARDIZING OF FRIT GRADES. AS ALREADY MENTIONED UNDER THE REALM OF TRANSACTION VALUE AS PER SECTION 4 EVEN THE SAME PR ODUCT COULD BE SOLD AT DIFFERENT PRICES DEPENDING UPON SEVERAL MARKET FACTORS AND AL L THESE PRICES WILL BE ACCEPTABLE AS PERMISSIBLE TRANSACTION VALUE. PRESENT SECTION 4 DOES NOT GO BY THE CONCEPT OF ITA NOS. 2783 TO 2787/AHD/2015 DCIT VS. BELGIUM GLASS & CERAMICS P LTD ASSESSMENT YEAR: 2005-06 TO 2009-10 PAGE 15 OF 20 NORMAL PRICE OF THE OLD SECTION 4 OF THE CENTRAL EX CISE ACT, 1944. IN THE ABSENCE OF EXACT QUANTIFICATION OF CASH RECEIVED BY INDIVIDUAL FRIT MANUFACTURER, TRANSACTION VALUE CANNOT BE ENHANCED EVEN IF THERE ARE HALF COOKED CI RCUMSTANTIAL EVIDENCES TO THE PROCEEDINGS INDICATING SUSPECTED UNDERVALUATION. I T IS NOW WELL UNDERSTOOD THAT SUSPICION HOWSOEVER GRAVE CANNOT TAKE THE PLACE OF AN EVIDENCE. THEREFORE, IT MAY NOT BE CORRECT TO HOLD THAT PREPONDERANCE OF PROBAB ILITY SHOULD ALWAYS BE GIVEN TO THE REVENUE, AS HON'BLE APEX COURT IN A PARTICULAR HELD IT TO BE SO. EACH CASE HAS TO BE DECIDED IN VIEW OF THE FACTS OF THAT CASE. IN VIEW OF THE ABOVE OBSERVATION AND THE LAW LAID DOWN BY THE APEX COURT IN THE CASE OF A. T AJUDEEN VS. UOI (SUPRA) PREPONDERANCE OF PROBABILITY CANNOT ALWAYS BE ALLOW ED IN FAVOUR OF THE REVENUE WHEN THERE IS NO INDEPENDENT CORROBORATION OF THE F ACTS AND THE CASE IS MADE ONLY ON THE BASIS OF STATEMENTS WHICH WERE NOT ALLOWED TO B E TESTED UNDER CROSS-EXAMINATION AS PER SECTION 9D (1)(B) OF THE CENTRAL EXCISE ACT, 1944. 14. IN VIEW OF THE REASONS RECORDED ABOVE, APPEALS FILED BY THE APPELLANTS MENTIONED IN PARAS 5.1 AND 5.2 OF THIS ORDER, ARE A LLOWED WITH CONSEQUENTIAL RELIEFS, IF ANY. MISCELLANEOUS APPLICATIONS ARE ALSO DISPOSED O F ACCORDINGLY. IN THIS BACKGROUND, LD. AUTHORISED REPRESENTATIVE S UBMITTED THAT HONBLE CESTAT HAS CONSIDERED THE MERIT OF THE CASE, RELEVANT MATE RIAL I.E PEN DRIVE AND ALSO STATEMENTS RECORDED BY EXCISE AUTHORITIES. ALL SUCH THREE QUES TIONS AS DISCUSSED IN ITS ORDER HAVE BEEN DECIDED IN FAVOUR OF ASSESSEE. SO FAR AS CIT(A)S O BSERVATION ARE CONCERNED THAT RELIEF GRANTED BY THE CESTAT IS HIGHLY TECHNICAL, IT WAS S UBMITTED BY THE LD. AUTHORISED REPRESENTATIVE THAT SUCH OBSERVATIONS ARE DEVOID OF MERIT. CESTAT HAS PASSED DETAILED REASONED ORDER. AS REGARD TO CIT(A)S OBSERVATION A S TO OPPORTUNITY OF CROSS EXAMINATION OF PERSONS WHOSE STATEMENTS HAVE BEEN RECORDED, LD. AU THORISED REPRESENTATIVE SUBMITTED THAT IT IS ABSOLUTELY ILLOGICAL ON THE PART OF THE LD. C IT(A) TO SEEK AN OPPORTUNITY OF EXAMINATION OF THE STATEMENTS RECORDED BY THE RELEVANT EXCISE AUTH ORITIES. LD. AUTHORISED REPRESENTATIVE FURTHER SUBMITTED THAT EXCISE DEPARTMENT PREFERRED AN APPEAL AGAINST ABOVE MENTIONED ORDER OF CESTAT BEFORE APEX COURT WHICH ACCORDING TO AR W AS DISMISSED AS WITHDRAWN VIDE ORDER DATED 27/01/2016 AND COPY OF SAME IS PLACED ON PAGE 327-328 OF PAPER BOOK. CONTENT OF THE SAME ARE REPRODUCED AS UNDER: IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NOS.OF 2016 D NO.39019/2015 COMMISSIONER OF CENTRAL EXCISE & ST, AHMEDABAD III ..APPELLANT(S) VERSUS ZIRCONIA CERA TECH. GLAZES PVT LTD & ANR...RESPONDE NT(S) ORDER LEARNED ADDITIONAL SOLICITOR GENERAL SEEKS LEAVE TO WITHDRAW THE APPEALS WITH A LIBERTY TO APPROACH THE HIGH COURT IN VIEW OF THE S TATUTORY REQUIREMENT. LEAVE AND LIBERTY GRANTED. THE APPEALS ARE DISMISSED AS WITHDRAWN. ..J. (MADAN B. LOKUR) ...J. (R.K. AGRAWAL) NEW DELHI JANUARY 27, 2016 **** ITA NOS. 2783 TO 2787/AHD/2015 DCIT VS. BELGIUM GLASS & CERAMICS P LTD ASSESSMENT YEAR: 2005-06 TO 2009-10 PAGE 16 OF 20 ITEM NO. 6 COURT NO.8 SECTION III SUPREME COURT OF INDIA RECORD OF PROCEEDINGS CIVIL APPEAL DIARY NO(S).39019/2015 COMMISSIONER OF CENTRAL EXCISE &ST, .APPE LLANT(S) AHMEDABAD - III VERSUS ZIRCONIA CERA TECH. GLAZES PVT LTD & ANR..RESPOND ENT (S) (WITHAPPLN. (S) FOR CONDONATION OF DELAY IN FILING APPEAL.) DATE : 27/01/2016 THIS APPEAL WAS CALLED ON FOR HEARING TODAY. CORAM : HON'BLE MR. JUSTICE MADAN B. LOKUR HON'BLE MR. JUSTICE R.K. AGRAWAL FOR APPELLANT(S) MR. N.K, KAUL, ASG MR. TARA CHANDRA SHARMA, ADV MR. NITESHDARYANANI, ADV. MR. B. KRISHNA PRASAD, AOR FOR RESPONDENT (S) MR. M. Y. DESHMUKH AOR UPON HEARING THE COUNSEL THE COURT MADE THE FOLLOWI NG ORDER LEARNED ADDITIONAL SOLICITOR GENERAL SEEKS LEAVE TO WITHDRAW THE APPEALS WITH A LIBERTY TO APPROACH THE HIGH COURT IN VIEW OF THE STATUTORY RE QUIREMENT. LEAVE AND LIBERTY GRANTED. THE APPEALS ARE DISMISSED AS WITHDRAWN. (SANJAY KUMAR-I) (JASWINDER KAUR) AR-CUM-PS COURT MASTER (SIGNED ORDER IS PLACED ON THE FILE) LD. AUTHORISED REPRESENTATIVE FURTHER BROUGHT TO OU R NOTICE THAT EVEN THE TAX APPEAL BEING TAX APPEAL NOS.733 & 734 OF 2016 PREFERRED BY THE EXCISE DEPARTMENT BEFORE THE HON'BLE GUJARAT HIGH COURT WAS DISMISSED VIDE ORDER DATED 07.12.2016. AND COPY OF THE SAME HAS BEEN ANNEXED AS ANNEXURE A T THE CHART FILED ON BEHALF OF THE ASSESSEE AND RELEVANT PORTION OF THE SAME IS REPRODUCED AS UNDER : CORAM: HONOURABLE MR.JUSTICE M.R. SHAH AND HONOURABLE MR.JUSTICE R.P.DHOLARIA DATE : 13/11/2013 ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE M.R. SHAH) [1.0] BY WAY OF THIS PETITION UNDER ARTICLE 226 OF THE CONSTITUTION OF INDIA, PETITIONER HAS PRAYED FOR AN APPROPRIATE WRIT, DIRECTION AND O RDER QUASHING AND SETTING ASIDE THE SHOW-CAUSE NOTICE DATED 14.03.2012[ANNEXURE C TO TH E PETITION] AS WELL AS THE IMPUGNED ORDER DATED30.03.2013 PASSED BY THE COMMER CIAL TAX OFFICER(4), MEHSANA BY WHICH AN ORDER OF REASSESSMENT HAS BEEN PASSED BY THE COMMERCIAL TAX OFFICER DIRECTING THE PETITIONER TO PAY AN AMOU NT OF RS.21,52,832/ TOWARDS THE ITA NOS. 2783 TO 2787/AHD/2015 DCIT VS. BELGIUM GLASS & CERAMICS P LTD ASSESSMENT YEAR: 2005-06 TO 2009-10 PAGE 17 OF 20 BALANCE TAX UNDER THE GUJARAT VALUE ADDED TAX ACT, 2003[HEREINAFTER REFERRED TO AS VAT ACT] AND ALSO DIRECTED TO PAY 150%PENALTY I.E . RS.32,29,248/AND IN ALL RS.73,19,630/. [2.0] FACTS LEADING TO THE PRESENT SPECIAL CIVIL AP PLICATION IN NUTSHELL ARE AS FOLLOWS: [2.1] THAT THE PETITIONER IS A DEALER REGISTERED UN DER THE VAT ACT. THAT THE PETITIONER IS EXCISABLE TO TAX ON THE BASIS OF ITS TURNOVER UN DER THE VAT ACT. FOR THE FINANCIAL YEAR 2006-07,THE PETITIONER FILED ITS RETURN WITH T HE AUTHORITIES UNDER THE ACT. SUCH RETURN WAS PROCESSED BY THE AUTHORITIES AND THE ORD ER THEREON WAS PASSED AND ACCORDINGLY THE PETITIONER PAID THE VALUE ADDED TAX OF RS.2,06,448/. [2.2] A NOTICE CAME TO BE ISSUED ON 14.03.2012 BY T HE ADJUDICATING AUTHORITY INDICATING THAT FOR THE PERIOD FROM 01.04.2007 TO 3 1.03.2008,HE HAS REASON TO BELIEVE THAT TAXABLE TURNOVER OF THE PETITIONER ASSESSEE HAS ESCAPED ASSESSMENT. THAT PETITIONER WA S REQUIRED TO ATTEND THE OFFICER ON 31.03.2012. THAT THE PETITIONER APPEARED BEFORE THE COMMERCIAL TAX OFFICER ASSESSING OFFICER AND SUBMITTED THAT THEY HAVE COME TO KNOW THAT AUTHORITY HAS RECEIVED CERTAIN INFORMATION FROM CENTRAL EXCISE I. E. DGCEI AND ON THE BASIS OF THE SHOW-CAUSE NOTICE ISSUED BY THE CENTRAL EXCISE DEPA RTMENT, ADJUDICATING AUTHORITY HAS INTENDED TO ENHANCE THE SALES AND ALSO INTENDED TO REASSESS UNDER SECTION 35(1) OF THE VAT ACT IT WAS ALSO SUBMITTED THAT EXCEPT TH E SHOW-CAUSE NOTICE ISSUED BY THE CENTRAL EXCISE DEPARTMENT, THERE IS NO MATERIAL TO SHOW THAT THE PETITIONER HAD SUPPRESSED THE SALES AND HAS EVADED THE TAX LIABILI TY. THAT SOLELY ON THE BASIS OF THE SHOW-CAUSE NOTICE ISSUED BY THE CENTRAL EXCISE DEPA RTMENT, THE AO CAME TO THE CONCLUSION THAT THERE WAS A SALE OF RS.17,45,46,653 /- AND ACCORDINGLY AT THE RATE OF 4%, THE TAX LIABILITY WOULD BE RS.67,13,333/- AGAIN ST WHICH THE CREDIT OF RS.43,54,053/- IS ADJUSTED. THE PETITIONER IS LIABL E TO PAY THE VAT OF RS.23,59,280/- AND GIVING THE CREDIT OF RS.2,06,448/- PAID BY THE PETITIONER TOWARDS THE TAX, THE PETITIONER IS LIABLE TO PAY BALANCE OFRS.21,52,832/ - TOWARDS VAT. CONSEQUENTLY, BY ORDER DATED 30.03.2013,THE AO HAS PASSED THE REASSE SSMENT ORDER DIRECTING THE PETITIONER TO PAY THE BALANCE AMOUNT OF RS.21,52,83 2/- ALONG WITH INTEREST UPTO31.03.2013 AND HAS ALSO IMPOSED THE PENALTY AT THE RATE OF 150% I.E. IN ALL RS.73,19,630/.FEELING AGGRIEVED AND DISSATISFIED WI TH THE IMPUGNED ORDER, THE PETITIONER THE PETITIONER HAS PREFERRED THE PRESENT SPECIAL CIVIL APPLICATION UNDER ARTICLE 226 OF THE CONSTITUTION OF INDIA. [2.3] AT THE OUTSET IT IS REQUIRED TO BE NOTED THAT WE ARE CONSCIOUS OF THE FACT THAT AGAINST THE IMPUGNED ORDER OF REASSESSMENT THE PETI TIONER HAS A STATUTORY REMEDY AVAILABLE BY WAY OF APPEAL HOWEVER, CONSIDERING THE FACT IN THE IDENTICAL FACTS AND CIRCUMSTANCES EARLIER THIS COURT HAS ENTERTAINED TH E PETITION AND HAS QUASHED AND SET ASIDE THE ORDER OF REASSESSMENT, IN THE FACTS AND C IRCUMSTANCES OF THE CASE, WE HAVE ENTERTAINED THE PRESENT PETITION. [2.4] THE PETITIONER HAS CHALLENGED THE IMPUGNED OR DER PASSED IN REASSESSMENT PROCEEDINGS, WHICH IS PASSED SOLELY ON THE BASIS OF THE SHOW-CAUSE NOTICE ISSUED BY THE EXCISE DEPARTMENT AND THE ADDITIONS ARE MADE. L EARNED COUNSEL APPEARING ON BEHALF OF THE PETITIONERS HAS VEHEMENTLY SUBMITTED THAT THIS SHOULD BE WHOLLY IMPERMISSIBLE. [3.0] SHRI PARIKH, LEARNED ADVOCATE APPEARING ON BE HALF OF THE PETITIONER HAS HEAVILY RELIED UPON THE DECISION OF THIS COURT IN THE CASE OF FUTURA CERAMICS PVT. LTD. VS. STATE OF GUJARAT RENDERED IN SPECIAL CIVIL APPLICAT ION NO.6500/2012 AND RELYING UPON THE SAID DECISION, IT IS SUBMITTED THAT SIMILAR REA SSESSMENT ORDER PASSED BY THE AO SOLELY ON THE BASIS OF THE SHOW CAUSE NOTICE ISSUED BY THE EXCISE DEPARTMENT HAS BEEN SET ASIDE BY THIS COURT. THEREFORE, IT IS REQU ESTED TO QUASH AND SET ASIDE THE IMPUGNED ORDER PASSED BY THE AO. [4.0] SHRI JAIMIN GANDHI, LEARNED AGP APPEARING ON BEHALF OF THE RESPONDENT IS NOT IN A POSITION TO DISPUTE THE ABOVE. HE IS ALSO NOT IN A POSITION TO DISPUTE THAT SIMILAR REASSESSMENT ORDER HAS BEEN SET ASIDE BY THIS COURT IN THE CASE OF FUTURA CERAMICS PVT. LTD. (SUPRA). HOWEVER, SHRI GANDHI, LEARNED AG P APPEARING ON BEHALF OF THE ITA NOS. 2783 TO 2787/AHD/2015 DCIT VS. BELGIUM GLASS & CERAMICS P LTD ASSESSMENT YEAR: 2005-06 TO 2009-10 PAGE 18 OF 20 RESPONDENT HAS REQUESTED TO RESERVE THE LIBERTY IN FAVOUR OF THE AO AND/OR APPROPRIATE AUTHORITY TO PASS REASSESSMENT ORDER AF RESH IN ACCORDANCE WITH LAW AND ON MERITS. [4.1] SHRI PARIKH, LEARNED ADVOCATE APPEARING ON BE HALF OF THE PETITIONER HAS SUBMITTED THAT IT MAY BE OBSERVED THAT FRESH REASSE SSMENT ORDER CAN BE PASSED IN ACCORDANCE WITH LAW AND ONLY IF THE SAME IS PERMISS IBLE UNDER THE LAW. [5.0] HAVING HEARD SHRI PARIKH, LEARNED ADVOCATE AP PEARING ON BEHALF OF THE PETITIONER AND SHRI GANDHI, LEARNED AGP APPEARING ON BEHALF OF THE RESPONDENTS AND HAVING GONE THROUGH THE IMPUGNED ORDER PASSED BY THE AO, I T APPEARS THAT THE REASSESSMENT ORDER HAS BEEN PASSED BY THE AO SOLELY ON THE BASIS OF SHOW CAUSE NOTICE ISSUED BY THE EXCISE DEPARTMENT. IT CAN BE S EEN THAT THE ASSESSMENT WHICH WAS PREVIOUSLY ONCLUDED WAS REOPENED ON THE PREMISE THAT DURING THE EXCISE RAID, IT WAS REVEALED THAT THE PETITIONER HAD CLANDESTINELY REMOVED GOODS WITHOUT PAYMENT OF EXCISE DUTY. THE SALES TAX DEPARTMENT, THEREFORE, F ORMED A BELIEF THAT VALUE OF THE GOODS + EXCISE DUTY EVADED AND FORMED PART OF TURNO VER OF THE ASSESSEE FOR THE PURPOSE OF TAX UNDER THE VAT ACT. IDENTICAL QUESTIO N CAME TO BE CONSIDERED BY THIS COURT IN THE CASE OF FUTURA CERAMICS PVT. LTD. (SUP RA) AND A SIMILAR REASSESSMENT ORDER WHICH WAS PASSED ON THE BASIS OF THE SHOW CAU SE NOTICE ISSUED BY THE EXCISE DEPARTMENT HAS BEEN SET ASIDE BY THE DIVISION BENCH OF THIS COURT BY OBSERVING AS UNDER: IT MAY BE THAT THE RAID CARRIED OUT BY THE EXCISE DUTY AND THE MATERIAL COLLECTED DURING SUCH PROCEEDINGS CULMINATING INTO ISSUANCE OF A SHOW CAUSE NOTICE FOR RECOVERY OF UNPAID EXCISE DUTY AND PENAL TY IN A GIVEN CASE SUFFICIENT TO REOPEN PREVIOUSLY CLOSED ASSESSMENT. IN THIS CASE, HOWEVER, WE ARE NOT CALLED UPON TO JUDGE THIS ISSUE AND WOULD T HEREFORE NOT GIVE ANY DEFINITE OPINION. THE QUESTION, HOWEVER, IS WHETHER ON A MERE SHOW CAUSE ISSUED BY THE EXCISE DEPARTMENT, THE SALES TAX DEPA RTMENT CAN MAKE ADDITIONS FOR THE PURPOSE OF COLLECTING TAX UNDER T HE GUJARAT VALUE ADDED TAX ACT WITHOUT ANY FURTHER INQUIRY. IF THE ASSISTANT C OMMISSIONER OF COMMERCIAL TAX HAS UTILIZED THE MATERIAL COLLECTED BY THE EXCI SE DEPARTMENT; INCLUDING THE STATEMENTS OF THE PETITIONER AND OTHER RELEVANT WITNESSES AND HAD COME TO AN INDEPENDENT OPINION THAT THERE WAS IN FACT EV ASION OF EXCISE DUTY BY CLANDESTINE REMOVAL OF GOODS, HE WOULD HAVE BEEN JU STIFIED IN MAKING ADDITIONS FOR THE PURPOSE OF VAT ACT. IN THE PRESEN T CASE, HOWEVER, NO SUCH EXERCISE WAS UNDERTAKEN. ALL THAT THE ASSESSING OFF ICER DID WAS TO RELY ON THE SHOW CAUSE NOTICE ISSUED BY THE EXCISE DEPARTMENT. NOWHERE DID HE CONCLUDE THAT THERE WAS A CASE OF CLANDESTINE REMOV AL OF GOODS WITHOUT PAYMENT OF TAX UNDER THE VAT ACT. MERELY BECAUSE TH E EXCISE DEPARTMENT ISSUED A SHOW CAUSE NOTICE, THAT CANNOT BE A GROUND TO PRESUME AND CONCLUDE THAT THERE WAS EVASION OF EXCISE DUTY IMPL YING THEREBY THAT THERE WAS ALSO EVASION OF TAX UNDER THE VAT ACT. IT IS NO T EVEN THE CASE OF THE DEPARTMENT THAT SUCH SHOW CAUSE NOTICE PROCEEDINGS HAS CULMINATED INTO ANY FINAL ORDER AGAINST THE PETITIONER. WE WONDER W HAT WOULD HAPPEN TO THE ORDER OF REASSESSMENT, IF ULTIMATELY THE EXCISE DEP ARTMENT WERE TO DROP THE PROCEEDINGS WITHOUT LEVYING ANY DUTY OR PENALTY FRO M THE PETITIONER. ALL IN ALL, THE ASSTT. COMMISSIONER HAS ACTED IN A MECHANICAL MANNER AND PASSED FINAL ORDER OF ASSESSMENT MERELY ON THE PREM ISE THAT THE EXCISE DEPARTMENT HAS ISSUED A SHOW CAUSE NOTICE ALLEGING CLANDESTINE REMOVAL OF THE GOODS. SUCH ORDER, THEREFORE, CANNOT BE SUSTAIN ED AND IS ACCORDINGLY QUASHED. WHEN THE ORDER IS EX FACIE ILLEGAL AND WHO LLY UNTENABLE IN LAW, MERE AVAILABILITY OF ALTERNATIVE REMEDY WOULD NOT PRECLU DE US FROM INTERFERING AT THIS STAGE IN A WRIT PETITION. [6.0] IN VIEW OF THE ABOVE DECISION OF DIVISION BEN CH OF THIS COURT, THE IMPUGNED REASSESSMENT ORDER DESERVES TO BE QUASHED AND SET A SIDE. HOWEVER LIBERTY CAN BE RESERVED IN FAVOUR OF THE DEPARTMENT TO PASS AN ORD ER AFRESH IN ACCORDANCE WITH LAW AND ON MERITS AFTER GIVING AN OPPORTUNITY TO THE PE TITIONER AND IF PERMISSIBLE UNDER THE LAW NOW. ITA NOS. 2783 TO 2787/AHD/2015 DCIT VS. BELGIUM GLASS & CERAMICS P LTD ASSESSMENT YEAR: 2005-06 TO 2009-10 PAGE 19 OF 20 [6.1] IN VIEW OF THE ABOVE AND FOR THE REASONS STAT ED ABOVE, PETITION SUCCEEDS. IMPUGNED ORDER PASSED BY THE COMMISSIONER TAX OFFIC ER(4), MEHSANA [ANNEXUREE] TO THE PETITION] DATED 30.03.2013 IS HEREBY QUASHED AND SET ASIDE. HOWEVER, IT IS OBSERVED THAT THE SAME SHALL NOT AFFECT THE PROCEED INGS UNDER THE CENTRAL EXCISE ACT FOR WHICH THE SHOW CAUSE NOTICE HAS BEEN ISSUED. A LIBERTY IS ALSO RESERVED IN FAVOUR OF THE DEPARTMENT TO PASS REASSESSMENT ORDER AFRESH IN ACCORDANCE WITH LAW AND ON MERITS AND AFTER GIVING FULLEST OPPORTUNITY TO THE PETITIONER AND IF PERMISSIBLE UNDER THE LAW NOW. RULE IS MADE ABSOLUTE TO THE AFORESAID EXT ENT. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THERE SHALL BE NO ORDER AS TO COSTS. SD/- (M.R. SHAH, J.) SD/- (R.P. DHOLARIA,J.) IN THIS BACKGROUND LD. AUTHORISED REPRESENTATIVE SU BMITTED THAT ADDITIONS BE DELETED IN BOTH THE YEARS. ON OTHER HAND LD. DEPARTMENTAL R EPRESENTATIVE SUPPORTED THE ORDERS OF AUTHORITIES BELOW AND CONTENDED THAT ORDER CESTAT I S TECHNICAL ONE SO SAME SHOULD BE IGNORED AND ORDERS OF AUTHORITIES BELOW BE UPHELD I N BOTH THE YEARS. 11. WE FIND THAT THE BASIS OF ADDITION IS CONTENTS OF SHOW-CAUSE NOTICE ISSUED BY THE EXCISE DEPARTMENT. AN INVESTIGATION WAS CARRIED OUT BY DGCEI AT ASSESSEE PREMISES ON 25/08/2008, WHEREIN IT WAS ALLEGED BY THE EXCISE DE PARTMENT THAT ASSESSEE HAS NOT DECLARED ACTUAL ASSESSABLE VALUE OF GOODS MANUFACTURED AND C LEARED FROM FACTORY. BASED ON ABOVE DGCEI ISSUED SHOW-CAUSE NOTICE DATED 19/04/2010, EX CISE DEPARTMENT CONCLUDED THAT ASSESSEE WAS ENGAGED IN UNDER VALUATION OF SALES AN D CLANDESTINE REMOVAL OF GOODS. ONLY ON THE BASIS OF SAME ASSESSING OFFICER REOPENED ASS ESSEES INCOME TAX ASSESSMENT FOR THE YEARS UNDER CONSIDERATION AND MADE ADDITION OF ESTI MATED GROSS PROFIT ON UNDER VALUATION SALES AND CLANDESTINE REMOVAL OF GOODS. THE REVENUE HAS BROUGHT NOTHING ON RECORD THAT IT HAS APPLIED ITS MIND OVER AND ABOVE THE CONTENTS O F SHOW-CAUSE NOTICE IN QUESTION THUS THERE IS LACK OF INDEPENDENT APPLICATION OF MIND ON BEHAL F OF REVENUE IN THESE MATTERS. 12. WITHOUT PREJUDICE TO ABOVE, WE FIND THAT IN EXC ISE PROCEEDINGS, CONCERNED AUTHORITIES PASSED ORDER AGAINST ASSESSEE AND MATTER WAS CARRIE D UP TO CONCERNED HONBLE CESTAT. HONBLE CESTAT VIDE ITS ORDER DATED 12/02/2015 AS D ISCUSSED ABOVE, HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE HOLDING THAT EXCISE DEPAR TMENT COULD NOT ESTIMATE VALUE OF ALLEGED SUPPRESSION OF SALES AS WELL AS CLANDESTINE REMOVAL OF GOODS MERELY ON THE BASIS OF ASSUMPTION AND SURMISES. THE CESTAT HAVING CONSIDER ED THE RELEVANT FACTS OF THE CASE AS WELL AS RELEVANT MATERIAL I.E. PEN DRIVE AND STATEM ENT RECORDED BY THE EXCISE DEPARTMENT HAS DECIDED THE MATTER IN FAVOUR OF THE ASSESSEE AS DIS CUSSED ABOVE. IN THESE CIRCUMSTANCES LD. CIT(A) WAS NOT JUSTIFIED IN OBSERVING THAT RELIEF G RANTED BY HONBLE CESTAT WAS HIGHLY TECHNICAL. 13. WE ALSO FIND THAT EXCISE DEPARTMENT CARRIED MAT TER BEFORE HONBLE APEX COURT WHEREIN SAME WAS DISMISSED AS WITHDRAWN AS MENTIONE D ABOVE. NOTHING CONTRARY WAS BROUGHT TO OUR KNOWLEDGE ON BEHALF OF REVENUE IN TH IS REGARD. 14. WE ALSO FIND THAT TAX APPEAL BEING TAX APPEAL N O.733 AND 734 OF 2016 PREFERRED BY THE LD. EXCISE DEPARTMENT BEFORE HONBLE GUJARAT HI GH COURT CAME TO BE DISMISSED VIDE ORDER DATED 07/12/2016, AS MENTIONED ABOVE. AGAIN N OTHING CONTRARY WAS BROUGHT TO OUR KNOWLEDGE ON BEHALF OF REVENUE IN THIS REGARD AS WE LL. IN THIS BACKGROUND, WE FIND THAT THE ORDER PASSED BY HONBLE CESTAT HAS ACHIEVED THE FIN ALITY AGAINST THE REVENUE. AS WE HAVE OBSERVED EARLIER THAT ONLY EXCISE DEPARTMENT ACTION WAS BASIS OF ADDITIONS BEFORE US IN BOTH THE YEARS WHICH DOES NOT SURVIVE FOR THE REASONS DI SCUSSED ABOVE, SO THE BASIS OF ADDITIONS MADE BY THE REVENUE DOES NOT SURVIVE. 15. IN VIEW OF THE ABOVE ADDITIONS MADE ON ACCOUNT AS ALLEGED VALUATION OF SALES AND CLANDESTINE REMOVAL OF GOODS DO NOT SURVIVE AND SAM E ARE DIRECTED TO BE DELETED IN BOTH THE ASSESSMENT YEARS. IN THE RESULT BOTH THE APPEALS FI LED BY THE ASSESSEE ARE ALLOWED. ITA NOS. 2783 TO 2787/AHD/2015 DCIT VS. BELGIUM GLASS & CERAMICS P LTD ASSESSMENT YEAR: 2005-06 TO 2009-10 PAGE 20 OF 20 7. RESPECTFULLY FOLLOWING THE VIEWS SO TAKEN BY THE CO-ORDINATE BENCH (SUPRA), WE CONFIRM THE CONCLUSIONS ARRIVED AT BY THE LEARNE D CIT(A) AND DECLINE TO INTERFERE IN THE MATTER. 8. IN THE RESULT, ALL THE FIVE APPEALS ARE DISMISSE D. PRONOUNCED IN THE OPEN COURT TODAY ON THE 11 TH JULY, 2018. SD/- SD/- MAHAVIR PRASAD PRAMO D KUMAR (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) AHMEDABAD, THE 11 TH DAY OF JULY, 2018 **BT COPIES TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER TRUE COPY ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES, AHMEDABAD 1. DATE OF DICTATION: .......3 PAGES DICTATION PAD ATTACHED.. 10.07.2018.... 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE T HE DICTATING MEMBER: .. 10.07.2018..... 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR . P.S./P.S.: 11.07.2018....... 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE TH E DICTATING MEMBER FOR PRONOUNCEMENT: .. .... 11.07.2018.. 5. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK : . 11.07.2018. 6. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK : . 7. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER : . 8. DATE OF DESPATCH OF THE ORDER: ......
