RAGHUVEER METAL INDUSTRIES LTD., Ajmer V. ACIT, Alwar

ITA 555/JPR/2016

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 3153 (ITAT-JAIPUR)
• Duration Of Justice: 3 year(s) 9 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-03-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2010-2011
• Appeal Filed On: 26-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K C GUPTA JCIT A
• Assessee Lawyers: PRANETI AG ARWAL
• Keywords: Business income; Search and seizure; Retraction; Set aside
• Section: 271(1)(c); 234B; 205; 143(2); 72; 13; 22

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S A, JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM VK;DJ VIHY LA-@ ITA. NO. 555 & 556/JP/2016 FU/KZKJ.K O'K Z@ ASSESSMENT YEARS : 2010-11& 2011-12 RAGHUVEER METAL INDUSTRIES LIMITED 21 ADARSH NAGAR, AJMER. CUKE VS. THE DCIT, CENTRAL CIRCLE, ALWAR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AABCR 7496 R VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI RANO JAIN (C.A.), SHRI HIMANS HU GOYAL (C.A.), SHRI PRATHU SINGAL (C.A. & PRANETI AG ARWAL (C.A.) JKTLO DH VKSJ LS @ REVENUE BY : SHRI K.C.GUPTA (JCIT) A LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 30/01/2020 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT : 12/03/2020 VKNS'K@ ORDER PER: VIKRAM SINGH YADAV, A.M. THESE ARE TWO APPEALS FILED BY THE ASSESSEE AGAINS T THE RESPECTIVE ORDERS OF LD. CIT(A)-IV, JAIPUR DATED 23 .03.2016 FOR THE ASSESSMENT YEARS 2010-11 & 2011-12 RESPECTIVELY. ITA NO. 555 &556/JP/2016 RAGHUVEER MENTAL INDUSTRIES LTD. VS. DCIT 2 2. WITH THE CONSENT OF BOTH THE PARTIES, THESE APPE ALS INVOLVING COMMON ISSUES WERE TAKEN UP FOR HEARING AND THE MAT TER WAS HEARD, AND NOW BEING DISPOSED OFF BY THIS CONSOLIDATED ORD ER. 3. FOR THE SAKE OF PRESENT DISCUSSION, WITH THE CON SENT OF BOTH THE PARTIES, ASSESSEES APPEAL IN ITA NO. 555/JP/2016 F OR THE ASSESSMENT YEAR 2010-11 HAS BEEN TAKEN AS A LEAD CASE WHEREIN THE ASSESSEE HAS TAKEN THE FOLLOWING GROUNDS AS APPEAL:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (A PPEALS) [CIT(A)] IS BAD, BOTH IN THE EYES OF LAW AND ON FAC TS. 2. (I) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED, BOTH ON FACTS AND IN LAW, IN CONF IRMING THE ADDITION OF RS.2010567/- MADE BY THE AO BY APPLYING THE RATE OF 1.60% OF GROSS PROFIT ON THE ALLEGED CLANDESTINE REMOVAL OF GOODS WORTH RS.125660484/- FROM THE PREMISES OF THE APPELLANT. (II) THAT THE LEARNED CIT(A) HAS ERRED IN SUSTAINING THE ABOVE ADDITION BY ARBITRARILY REJECTING THE EXPLANATIONS AND EVIDENCES BROUGHT ON RECORD BY THE ASSESSEE. (III) THAT THE LD. CIT(A) HAS ERRED IN RELYING ON THE ORD ER OF THE AO WITH RESPECT TO HIS RELIANCE ON THE FINDINGS OF THE EXCISE DEPARTMENT IGNORING THE DETAIL EXPLANATIONS FILED B EFORE HIM AND IGNORING THE FACT THAT THE ASSESSEE HAS FILED A N APPEAL AND HAS CHALLENGED THE ACTION OF EXCISE DEPARTMENT BEFO RE THE HONORABLE CESTAT, NEW DELHI. 3. (I) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED, BOTH ON FACTS AND IN LAW, IN CONFIRMING THE ADDITION OF RS.7564761/- MADE BY THE AO BY APPLYING AN ESTIMATED RATE OF 6.02% OF STOCK TURNOVER RATIO ON TOTAL ALLEGED ITA NO. 555 &556/JP/2016 RAGHUVEER MENTAL INDUSTRIES LTD. VS. DCIT 3 CLANDESTINE REMOVAL OF GOODS WORTH RS.125660484/- A ND CONSIDERING THE AMOUNT OF RS.7564761/- AS UNDISCLOS ED INITIAL INVESTMENT IN STOCK/ PURCHASES. (II)THAT THE LEARNED CIT(A) HAS ERRED IN SUSTAINING THE ABOVE ADDITION BY ARBITRARILY REJECTING THE EXPLANATIONS AND EVIDENCES BROUGHT ON RECORD BY THE ASSESSEE. (III)THAT THE LD. CIT(A) HAS ERRED IN RELYING ON TH E ORDER OF THE AO WITH RESPECT TO HIS RELIANCE ON THE FINDINGS OF THE EXCISE DEPARTMENT IGNORING THE DETAIL EXPLANATIONS FILED B EFORE HIM AND IGNORING THE FACT THAT THE ASSESSEE HAS FILED A N APPEAL AND HAS CHALLENGED THE ACTION OF EXCISE DEPARTMENT BEFO RE THE HONORABLE CESTAT, NEW DELHI. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED, BOTH ON FACTS AND IN LAW IN PASSI NG THE ORDER WITHOUT PROVIDING ADEQUATE OPPORTUNITY TO THE APPEL LANT. (II)THAT THE CIT(A) HAS ERRED IN NOT CONSIDERING TH E ADJOURNMENT APPLICATION FILED BY THE APPELLANT ON 2 3.03.2016 WHEREIN TIME FOR JUST ONE DAY WAS SOUGHT AS THE COU NSEL WAS IN DELHI. (III)THAT THE LD. CIT(A) HAS ERRED IN NOT ACCEPTING THE REJOINDER TO REMAND REPORT FILED BEFORE HIM AND ALSO REFUSING TO ACCEPT THE REJOINDER SENT THROUGH COURIER. (IV)THAT THE CIT(A) HAS ERRED IN NOT ACCEPTING THE PLEA OF THE APPELLANT THAT SINCE THE CASE OF THE APPELLANT WAS PENDING AT HONORABLE CESTAT NEW DELHI THE PRESENT CASE IN APPE AL TO BE ADJOURNED SINE DIE TILL THE DISPOSAL OF THE SAID AP PEAL BY CESTAT, NEW DELHI. (V)THAT THE LD. CIT(A) HAS ERRED IN NOT ACCEPTING T HE PLEA OF THE ASSSESSE FOR APPLYING RATIO OF THE DECISION PAS SED BY HONORABLE RAJASTHAN HIGH COURT IN THE ASSESSEE'S OW N CASE ITA NO. 555 &556/JP/2016 RAGHUVEER MENTAL INDUSTRIES LTD. VS. DCIT 4 WHEREIN THE PROCEEDINGS FOR AY 2008-09 & 2009-10 HA VE BEEN STAYED FOR THE WANT OF ORDER BY HONORABLE CESTAT. 5. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED, IN DISMISSING THE GROUND FOR ERRO R MADE BY AO IN CHARGING INTEREST UNDER SECTION 234B 86 234D OF THE ACT. 6. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED, IN DISMISSING THE GROUND FOR INIT IATION OF PENALTY BY AO UNDER SECTION 271(1)(C) OF THE ACT. 4. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSES SEE IS ENGAGED IN MANUFACTURING AND TRADING OF TMT BARS. IT FILED ITS RETURN OF INCOME DECLARING TOTAL INCOME AT NIL ON 26.09.2020 AND THE REAFTER THE MATTER WAS SELECTED FOR SCRUTINY BY ISSUANCE OF NOTICE U/S 143(2) OF THE ACT. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT CAM E TO THE KNOWLEDGE OF THE ASSESSING OFFICER THAT THE ASSESSEE COMPANY WAS INDULGED IN EVASION OF CENTRAL EXCISE DUTY BY RESORTING TO CLAN DESTINE MANUFACTURE AND CLEARANCE OF FINISH GOODS. DGCEI CONDUCTED SEAR CH OPERATIONS AT THE ASSESSEES FACTORY PREMISES AND OTHER PREMISES OF ITS ASSOCIATES. DURING THE COURSE OF SEARCH, CERTAIN INCRIMINATING DOCUMENTS AND ASSETS WERE RECOVERED AND PHYSICAL VERIFICATION OF FINISHE D GOODS AND RAW MATERIAL WAS ALSO CONDUCTED WHICH RESULTED IN DETEC TION OF VARIOUS DISCREPANCIES. STATEMENT OF SHRI SUNIL KHURANA, DIR ECTOR OF THE ASSESSEE COMPANY WAS ALSO RECORDED. THEREAFTER, ADDITIONAL D IRECTOR GENERAL, DGCEI, DELHI ZONE ISSUED A SHOW CAUSE NOTICE TO THE ASSESSEE ON 11.03.2011 AND 25.11.2011. THEREAFTER, COMMISSIONER CENTRAL EXCISE, JAIPUR ADJUDICATED THE CASE OF THE ASSESSEE AND HEL D THAT THE ASSESSEE WAS INDULGED IN EVASION OF CENTRAL EXCISE DUTY BY R ESORTING TO CLANDESTINE MANUFACTURE AND CLEARANCE OF FINISHED G OODS. AS PER SHOW ITA NO. 555 &556/JP/2016 RAGHUVEER MENTAL INDUSTRIES LTD. VS. DCIT 5 CAUSE NOTICE DATED 25.11.2011 OF DGCEI, THE ASSESSE E HAS REMOVED GOODS FROM HIS FACTORY PREMISES WORTH RS. 23,21,52, 189/- DURING THE PERIOD 24.02.2009 TO 26.02.2010 AND FOR RS. 17,88,4 0,952/- DURING THE PERIOD 27.02.2010 TO 31.08.2011. BASIS SAID INFORMA TION IN POSSESSION OF THE ASSESSING OFFICER, DURING THE COURSE OF ASSE SSMENT PROCEEDINGS, AN EXERCISE WAS CARRIED OUT TO IDENTIFY THE QUANTUM OF CLANDESTINE REMOVAL OF GOODS DURING THE PERIOD 01.04.2009 TO 31 .03.2010 WHICH WORKED OUT TO 4585.145 MT VALUED AT RS. 15,13,68,61 5/- AND ACCORDINGLY, A SHOW CAUSE WAS ISSUED AS TO WHY THE AMOUNT OF RS. 15,13,68,615/- SHOULD NOT BE ADDED TO THE ASSES SEES INCOME FOR A.Y. 2010-11 BEING THE UNRECORDED SALES MADE OUT OF BOOKS. IN RESPONSE, THE ASSESSEE FILED ITS SUBMISSIONS. THE SUBMISSIONS SO FILED WERE CONSIDERED HOWEVER, NOT FOUND ACCEPTABLE TO TH E ASSESSING OFFICER AND HE PROCEEDED TO MAKE AN ADDITION OF RS. 75,64,7 61/- ON ACCOUNT OF UNDISCLOSED INVESTMENT IN STOCK AND ANOTHER ADDITIO N OF RS. 20,10,567/- ON ACCOUNT OF PROFIT ON SALES OF UNDISCLOSED STOCK AND THE RELEVANT FINDINGS OF THE ASSESSING OFFICER ARE CONTAINED AT PARAS 7 TO 10 OF THE ASSESSMENT ORDER WHICH ARE REPRODUCED AS UNDER:- 7. THE REPLY FILED BY ASSESSEE HAS BEEN CONSIDERED . DURING THE COURSE OF HEARING, THE LD. A.R. VEHEMENTLY ARGUED T HAT THE ACTION OF CENTRAL EXCISE DEPARTMENT WAS BIASED AND HAS BEE N CHALLENGED. MOREOVER, THE ASSESSEE IS IN THE PROCES S OF FILING OF APPEAL CESTAT WHERE TOTAL RELIEF IS EXPECTED. IT WA S ALSO ARGUED THAT EVEN IF THE TURNOVER OF 15.13 CR. IS TO BE ADO PTED, IN NO CONDITION THE TOTAL SALES CAN BE ADDED. THE ASSESSE E HAS CITED CERTAIN CASE LAWS IN FAVOUR OF ITS CLAIM. A REQUEST HAS ALSO BEEN ITA NO. 555 &556/JP/2016 RAGHUVEER MENTAL INDUSTRIES LTD. VS. DCIT 6 MADE TO KEEP THE PROCEEDINGS ABEYANCE TILL DECISION OF CESTAT APPEAL. 8. THE MATTER HAS BEEN CONSIDERED. BUT THE PLEA OF THE ASSESSEE IS NOT ACCEPTABLE IN TOTO. THE ASSESSEE PLEADED THE AVERAGE OF RATE OF SALE OF FINISHED GOODS IN THE CASE OF THE A SSESSEE AS PER THE BALANCE SHEET IS RS. 27,406/- PER MT. IT IS PERTAINING TO MENTION HERE THAT DURING THE YE AR UNDER CONSIDERATION THE ASSESSEE HAS MADE UNDISCLOSED PRO DUCTION AND SALE OF RS. 12,56,60,484/- ( 4548.145 MT @ 27,406 P MT WORKS OUT TO RS. 12,56,60,484/-). IT IS AN ADMITTED FACT THAT THE SALES IS OF FINISHED GOODS FOR WHICH THE ASSESSEE HAS TO INC UR SOME COST IN PROCESS OF MANUFACTURING AND IN INVESTMENT IN ST OCK, THEREFORE, THE ENTIRE SALES CANNOT BE TREATED AS INCOME OF THE ASSESSEE. 9. NOW, THE QUESTION ARISES THAT FOR MAKING THIS MU CH OF PRODUCTION AND SALES HOW MUCH STOCK INVESTMENT WOUL D BE MADE BY THE ASSESSEE AND HOW MUCH PROFIT WOULD ARISE TO THE ASSESSEE. TO ASCERTAIN THE UNDISCLOSED INVESTMENT I N STOCK THE ASSESSEE WAS ASKED TO SUBMIT STOCK TURNOVER RATIO A S REFLECTED IN REGULAR FINANCIAL STATEMENTS AS ON 31.03.2010 AND 3 1.03.2009. AS PER THE FINANCIAL STATEMENTS OF THE ASSESSEE, THE S TOCK TURNOVER RATIO OF MANUFACTURED FINISHED GOODS FOR 31.03.2010 WAS 6.52% AND FOR 31.03.2009 WAS 5.52%, THEREFORE, THE AVERAG E OF BOTH I.E. 6.02% CAN REASONABLY TAKEN AS UNDISCLOSED INVE STMENT MADE IN STOCK BY THE ASSESSEE FOR ACHIEVING PRODUCTION A ND SALE OF RS. 12,56,60,484/-. THEREFORE, THE UNDISCLOSED INVESTME NTS IN STOCK ITA NO. 555 &556/JP/2016 RAGHUVEER MENTAL INDUSTRIES LTD. VS. DCIT 7 IS WORKED OUT AT RS. 75,64,761/- ( 12,56,60,484*6.0 2%) AND THE SAME IS ADDED TO THE TOTAL INCOME OF ASSESSEE. 10. FURTHER, FROM THE PERUSAL OF MANUFACTURING ACCO UNT OF THE ASSESSEE, IT REVEALS THE ASSESSEE DECLARED GROSS PR OFIT RATE OF 1.60% ON SALES. THEREFORE, A G.P. RATE OF 1.60% CAN BE REASONABLY APPLIED ON UNDISCLOSED SALES OF RS. 12,5 6,60,484/- WHICH COMES TO RS. 20,10,567/- RESULTING IN ADDITIO N OF RS. 20,10,567/- TO THE TOTAL INCOME OF THE ASSESSEE. 5. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A) WHO HAS SUSTAINED THE SAID ADDITION MADE BY THE AO. THE LD. CIT(A) STATED IN HIS ORDER THAT HE HAS GONE THROUGH THE ORDER PASSED BY THE COMMISSIONER, CENTRAL EXCISE, JAIPUR WHEREIN ON THE BASIS OF FINDINGS OF SEARCH CONDUCTED BY DGCEI, IT WAS FOUND THAT THE ASSESSEE WAS INDULGED IN EVASION OF CENTRAL EXCISE DUTY BY RESORTING TO CLANDESTINE MANUFACTURE AND CLEARANCE OF FINISH GOO DS. THE LD. CIT(A) FURTHER HELD THAT THE AO HAS MADE ADDITION BASED ON FINDINGS OF SEARCH CONDUCTED BY DGCEI WHICH IS DULY APPROVED BY LD. CO MMISSIONER CENTRAL EXCISE, JAIPUR. HE ALSO ACKNOWLEDGED THE F ACT THAT AGAINST THE SAID ORDER OF COMMISSIONER CENTRAL EXCISE, THE ASSE SSEE IS IN APPEAL BEFORE CESTAT, NEW DELHI. FINALLY, HE CONFIRMED TH E ADDITION MADE BY THE ASSESSING OFFICER. AGAINST THE SAID FINDINGS, THE ASSESSEE IS IN APPEAL BEFORE US. 6. DURING THE COURSE OF HEARING, THE LD. AR SUBMITT ED THAT THE PRESENT APPEAL FILED BY THE ASSESSEE IS AGAINST THE ORDER OF THE CIT(A), WHEREBY HE HAS CONFIRMED THE ORDER OF A.O. MAKING T WO ADDITIONS OF ITA NO. 555 &556/JP/2016 RAGHUVEER MENTAL INDUSTRIES LTD. VS. DCIT 8 RS. 75,64,761/- AND RS. 20,10,567/- ON THE BASIS OF CERTAIN ENQUIRIES MADE BY THE EXCISE DEPARTMENT. A SEARCH AND SEIZURE OPERATION WAS CONDUCTED AT THE PREMISES OF THE ASSESSEE AND ALSO SOME OTHER DEALERS AND TRANSPORTERS BY THE EXCISE DEPARTMENT. ON THE B ASIS OF THIS SEARCH, THE EXCISE DEPARTMENT ALLEGED THAT THE ASSESSEE HAD PROCURED SCRAP FROM VARIOUS PARTIES WHICH WAS NOT ACCOUNTED FOR AN D HAS PROCESSED IT AND SUCH PRODUCTION WAS ALSO NOT ACCOUNTED FOR. IT WAS ALSO ALLEGED THAT THIS PRODUCTION HAS BEEN CLEARED CLANDESTINELY BY THE ASSESSEE WITHOUT PAYMENT OF DUTY. TOTAL CLANDESTINE REMOVAL OF GOODS ALLEGED BY THE EXCISE DEPARTMENT FOR THE PERIOD FROM 01.11.200 6 TO 31.08.2011 WAS RS.177,93,97,766/-, RESULTING IN EVASION OF DUT Y AMOUNTING TO RS. 23,85,67,946/-. 7. IT WAS FURTHER SUBMITTED THAT THE ASSESSING OFFI CER IN THE PRESENT INCOME TAX PROCEEDINGS, ON THE BASIS OF INVESTIGATI ON DONE BY THE EXCISE DEPARTMENT ALLEGED THE FOLLOWING AMOUNTS AS UNDISCLOSED PRODUCTION AND SALE BY THE ASSESSEE AMOUNTING TO RS . 12,56,60,484/- FOR A.Y. 2010-11, RS 10,49,36,677/- FOR A.Y. 2011- 12 AND RS 90,30,90,223/- A.Y. 2012-13. 8. IT WAS FURTHER SUBMITTED THAT THE ASSESSEE WENT INTO APPEAL IN EXCISE PROCEEDINGS AGAINST THE DEMAND RAISED BEFORE THE COMMISSIONER (APPEALS), WHO GAVE THE FOLLOWING RELIEF TO THE ASS ESSEE, VIDE HIS ORDER NO. 80-81/2012/C.EX/JPR-II-COMMISSIONER, DT. 31.12. 2012: CLANDESTINE REMOVAL OF GOODS RS. 5,15,23,781/- RESULTING IN DUTY THEREON RS. 51,47,39 0/- ITA NO. 555 &556/JP/2016 RAGHUVEER MENTAL INDUSTRIES LTD. VS. DCIT 9 THEREAFTER, THE ASSESSEE WENT IN FURTHER APPEAL BEF ORE THE CESTAT AGAINST THIS ORDER OF THE COMMISSIONER (APPEALS). T HE CESTAT PASSED THE FINAL ORDER DT. 20.10.2017 IN APPEAL NO. A/5728 5-57299/2017- EX[DB], DELETING THE WHOLE DEMAND RAISED BY THE EXC ISE DEPARTMENT AND REFERENCE CAN BE DRAWN TO PARA 44 OF THE ORDER OF THE CESTAT WHEREIN THE FOLLOWING DIRECTIONS ARE GIVEN: (A) THE DEMAND OF RS. 7,33,57,221/- IS SET ASIDE; (B) THE DEMAND OF RS. 16,00,60,335/- IS SET ASIDE IT WAS SUBMITTED THAT IN THIS MANNER, A RELIEF OF T OTAL RS. 23,34,17,556/- (7,33,57,221+ 16,00,60,335), HAS BEEN GRANTED BY CE STAT. A RELIEF OF RS. 51,47,390/- WAS ALREADY GRANTED BY THE COMMISSI ONER (APPEALS). IN TOTAL, A RELIEF OF RS. 23,85,64,946/- (23,34,17,556 + 51,47,390), HAS BEEN GRANTED, WHICH WAS EXACTLY THE AMOUNT OF TOTAL DEMAND RAISED BY THE EXCISE DEPARTMENT. IN VIEW OF THE ABOVE, IT MAY BE SEEN THAT ALL THE ALLEGATIONS LEVIED ON THE ASSESSEE BY THE EXCISE DE PARTMENT HAVE BEEN HELD NON-SUSTAINABLE AND THE MATTER HAS BEEN DECIDE D IN ASSESSEES FAVOUR. 9. IT WAS FURTHER SUBMITTED THAT AS THE ASSESSING OFFICER IN THE PRESENT INCOME TAX PROCEEDINGS HAS WHOLLY RELIED ON THE FINDINGS IN EXCISE PROCEEDINGS AND THE ASSESSEE HAVING BEEN DIS CHARGED IN EXCISE PROCEEDINGS AND THE WHOLE DEMAND BEING SET-ASIDE, T HE ADDITIONS MADE BY THE ASSESSING OFFICER DOESNT SURVIVE AND NEED T O BE DELETED. FURTHER, LD AR DRAWN OUR REFERENCE TO THE ASSESSMEN T ORDER WHERE THE A.O. HAD SOLELY RELIED ON THE EXCISE PROCEEDINGS AN D HAS NOT DONE ANY INDEPENDENT EXERCISE. THE LD. CIT(A) ALSO PREFERRE D NOT TO MAKE ANY ITA NO. 555 &556/JP/2016 RAGHUVEER MENTAL INDUSTRIES LTD. VS. DCIT 10 INDEPENDENT VERIFICATION ETC. AND JUST CONFIRMED TH E ORDER OF THE A.O. IN VIEW OF THE ABOVE, IT WAS SUBMITTED THAT THE WHOLE ADDITION HAVING BEEN MADE ON THE BASIS OF EXCISE PROCEEDINGS AND AS SESSEE HAVING BEEN DISCHARGED AGAINST ALL THE ALLEGATIONS MADE BY THE EXCISE DEPARTMENT BY THE HONBLE CESTAT, THE ADDITIONS MAD E BY A.O. ARE LIABLE TO BE DELETED. 10. PER CONTRA, THE LD. DR IS HEARD WHO HAS VEHEMEN TLY ARGUED THE MATTER. HE HAS AGAIN TAKEN US THROUGH THE FINDINGS OF THE ASSESSING OFFICER AND SUBMITTED THAT IT IS A CLEAR CASE OF EV ASION OF EXCISE DUTY BY THE ASSESSEE AND WHICH HAS BEEN DETECTED OF DGCE I AND BASIS SUCH DETECTION OF CLANDESTINE MANUFACTURE AND CLEAR ANCE OF FINISHED GOODS, THE AO HAS DETERMINED UNDISCLOSED PRODUCTION AND SALE OF FINISHED GOODS AMOUNTING TO RS. 12,56,60,484/- AND BASIS, THE SAME, HE HAS DETERMINED UNDISCLOSED INVESTMENT IN STOCK OF R S 75,64,761/- AND UNDISCLOSED PROFITS OF RS 20,10,567 ON SUCH UNDISCL OSED SALES. HE ACCORDINGLY SUPPORTED THE ORDER OF LOWER AUTHORITIE S. 11. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PE RUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE ADDI TIONS MADE BY THE ASSESSING OFFICER IS ARISING OUT OF THE SEARCH ACTI ON CARRIED OUT BY DGCEI CONDUCTED AT THE ASSESSEES FACTORY PREMISES WHEREIN IT WAS FOUND THAT THE ASSESSEE WAS INVOLVED IN CLANDESTINE MANUFACTURE AND CLEARANCE OF FINISH GOODS. DURING THE COURSE OF AS SESSMENT PROCEEDINGS, BASIS SUCH SEARCH ACTION AND SUBSEQUEN T PROCEEDING COMPLETED BY THE LD COMMISSIONER, CENTRAL EXCISE, T HE AO QUANTIFIED THE VALUE OF SUCH CLANDESTINE GOODS FOR THE YEAR UN DER CONSIDERATION WHICH WAS DETERMINED AT 4585.145 MT WHICH WAS VALUE D AT RS ITA NO. 555 &556/JP/2016 RAGHUVEER MENTAL INDUSTRIES LTD. VS. DCIT 11 15,13,68,615/- @ RS 33,012.83 PER MT AND A SHOW CAU SE WAS ISSUED TO THE ASSESSEE AS TO WHY RS. 15,13,68,615/- SHOULD NO T BE ADDED TO THE ASSESSEES INCOME BEING UNRECORDED SALE MADE OUT OF THE BOOKS. IN RESPONSE, THE ASSESSEE FILED ITS SUBMISSIONS STATIN G THAT ACTION OF CENTRAL EXCISE DEPARTMENT IS NOT ACCEPTABLE AND THE ASSESSEE IS IN THE PROCESS OF CHALLENGING THE SAME BY WAY OF FILING AN APPEAL BEFORE CESTAT AND A REQUEST WAS MADE TO KEEP THE PROCEEDIN GS IN ABEYANCE TILL THE DECISION OF CESTAT. THE ASSESSEE ALSO SUB MITTED THAT IN ANY CASE, THE TOTAL SALES CANNOT BE ADDED IN ITS HANDS AND IN SUPPORT CERTAIN DECISIONS WERE CITED BEFORE THE AO. THE SAME SO FI LED WAS CONSIDERED BUT NOT FOUND FULLY ACCEPTABLE TO THE ASSESSING OFF ICER. THE ASSESSING OFFICER FINALLY DETERMINED UNDISCLOSED PRODUCTION A ND SALE OF RS 12,56,60,484 WHERE 4585.145 MT WAS VALUED AT RS 27, 406/-. HERE, IT IS NOTED THAT AS AGAINST VALUE OF RS 33,012.83 PER MT, THE AO FINALLY APPLIED VALUE OF RS 27,406/- PER MT AS SUBMITTED BY THE ASSESSEE. ON SUCH UNDISCLOSED PRODUCTION AND SALES, THE AO DETER MINED AN AMOUNT OF RS. 75,64,761/- ON ACCOUNT OF UNDISCLOSED INVEST MENT IN STOCK AND ANOTHER ADDITION OF RS. 20,10,567/- WAS MADE ON ACC OUNT OF PROFIT ON SALES OF UNDISCLOSED STOCK AT THE DECLARED G.P OF 1 .6%. THEREFORE, WE FIND THAT THE WHOLE ADDITION OF RS. 95,75,328/- HAS BEEN MADE BY THE ASSESSING OFFICER BASIS THE FINDINGS OF DGECI RELA TING TO MANUFACTURE AND CLANDESTINE REMOVAL OF FINISHED GOODS AND WHICH HAS BEEN CONFIRMED BY THE ORDER OF THE LD COMMISSIONER CENTR AL EXCISE. AT THE SAME TIME, IT IS ALSO AN ADMITTED FACT THAT THE ASS ESSEE HAS MOVED IN AN APPEAL AGAINST THE ORDER OF LD COMMISSIONER CENTRAL EXCISE BEFORE THE CESTAT WHO VIDE ORDER DATED 20.10.2017 HAS SET-ASID E THE WHOLE DEMAND RAISED AGAINST THE ASSESSEE. THE LD. CIT(A) HAS ALSO RECORDED A ITA NO. 555 &556/JP/2016 RAGHUVEER MENTAL INDUSTRIES LTD. VS. DCIT 12 SIMILAR FINDING THAT THE AO HAS MADE ADDITION BASED FINDINGS OF SEARCH CONDUCTED BY DGCEI WHICH IS APPROVED BY LD. COMMISS IONER CENTRAL EXCISE, JAIPUR. FURTHER, THE FACT THAT THE ASSESSE E HAS MOVED IN AN APPEAL WAS ALSO NOTED BY THE LD CIT(A). APPARENTLY , AT THE TIME OF PASSING OF THE ORDER BY LD. CIT(A) ON 23.03.2016, T HE ORDER OF THE CESTAT WAS NOT PRONOUNCED AND THEREFORE, COULDNT B E CONSIDERED BY HIM. 12. WE REFER TO THE ORDER DATED 20.10.2017 PASSED B Y THE CESTAT AND WE DEEM IT APPROPRIATE TO REPRODUCE THE SAME AS UNDER:- THESE APPEALS INCLUDING ONE APPEAL OF REVENUE ARIS E FROM COMMON ORDER-IN-ORIGINAL NO.80-81/2012/C.EX/JPR-II, COMMIS SIONER DATED 31 DECEMBER, 2012. THE DETAILS OF THE APPEALS ARE AS F OLLOWS:- SL.NO. APPEAL NO. APPELLANTS NAME DEMAND/PENALTY R EASON 1 E/56611/2013 RUGHUVEER METAL INDUSTRIES LTD. DUTY - RS.233420556/- PENALTY- RS.233420556/- CHARGE OF CLANDESTINE CLEARANCE. 2 E/56612/2013 RUGHUVEER METAL INDUSTRIES LTD. REDEMPTION FINE - RS.1000000/- CONFISCATION OF GOODS WORTH RS.70,49,861/- & CURRENCY OF RS.66,30,000/- CONFISCATION UNDER RULE 25 OF CER, 2002 (PANCHNAMA DATED 15.09.2010 ITA NO. 555 &556/JP/2016 RAGHUVEER MENTAL INDUSTRIES LTD. VS. DCIT 13 (RUD - 1) 3 E/56613/2013 MR. ANIL POKHARNA RS.1,00,00,000/- RULE 26 OF CER, 2002 4 E/56614/2013 RAJASTHAN COMMERCIAL HOUSE REDEMPTION FINE - RS.2,00,000/- CONFISCATION OF GOODS WORTH- RS.10,24,676/- & CURRENCY OF RS.23,00,000/- CONFISCATION UNDER RULE 25 OF CER, 2002 [PANCHNAMA DATED 14.09.2010 (RUD-6)] 5 E/56615/2013 MR. RAJ KUM AR POKHARNA RS.1,00,00,000/- RULE 26 OF CER, 2002 6 E/56616/2013 MR. SUNIL POKHARNA, DIRECTOR OF RMIL RS.1,00,00,000/- --DO-- 7 E/56617/2013 MR. SUYOG KABRA RS.2,00,000/ -- DO -- 8 E/56618/2013 RAJASTHAN STEELS RS.1,00,00,000/- RULE 25 OF CER, 2002 9 E/5 6619/2013 RAJASTHAN COMMERCIAL HOUSE RS.1,00,00,000/ - -- DO -- 10 E/56620/2013 RAJASTHAN STEEL REDEMPTION FINE - RS.2,00,000/- CONFISCATION OF CURRENCY OF RS.13,00,000/- CONFISCATION UNDER RULE 25 OF CER, 2002 [PANCHNAMA DATED 14.09.2010 ITA NO. 555 &556/JP/2016 RAGHUVEER MENTAL INDUSTRIES LTD. VS. DCIT 14 (RUD - 6)] 11 E/56621/2013 MR. SURENDRA KUMAR (AUTHORIZED SIGNATORY) RS.5,00,000/- RULE 26 OF CER, 2002 12 E/56687/2013 MR. PRATEEK GARG RS.50,000/ - -- DO -- 13 E/56688/2013 MR. SURESH GARG RS.50,000/ - -- DO -- 14 E/56689/2013 MR. SANJAY GARG RS.50,000/- --DO-- 15 E/56670/2013 DEPARTMENTS APPEAL AGAINST RAGHUVEER METAL INDUSTRIES LTD. RS.51,47,390/- CHARGE OF CLANDESTINE CLEARANCE DROPPED ON ACCOUNT OF DUPLICATION OF DEMAND. AS ALL THESE APPEALS ARISE FROM THE SAME INVESTIGAT ION AND ARE INTERCONNECTED/COMMON ISSUE, ARE ACCORDINGLY TAKEN UP TOGETHER FOR DISPOSAL. 2. THE MAIN APPELLANT-M/S. REGHUVEER METAL INDUSTRI ES LIMITED (RMIL FOR SHORT) ARE ENGAGED IN MANUFACTURE OF TMT BARS UNDER THE BRAND NAME OF KAMDHENU AND MS INGOTS CL ASSIFIABLE UNDER CHAPTER 72 OF CENTRE EXCISE TARIFF ACT, 1985. THE APPELLANT IS REGULARLY PAYING THE CENTRAL EXCISE DUTY AND ALS O AVAILING BENEFIT OF CENVAT CREDIT ON INPUTS. THE MAIN RAW MA TERIALS USED ARE STEEL SCRAP AND SPONGE IRON. ITA NO. 555 &556/JP/2016 RAGHUVEER MENTAL INDUSTRIES LTD. VS. DCIT 15 3. THE BRAND NAME KAMDHENU BELONGS TO KAMDHENU I SPAT LTD. (KIL FOR SHORT), WHO CHARGED A ROYALTY OF RS. 150 PER METRIC TON OF SALES MADE BY THE APPELLANT EXCLUDING SERVIC E TAX. 4. ON THE BASIS ON INFORMATION THAT RMIL- APPELLANT WERE INDULGING IN EVASION OF DUTY BY CLANDESTINELY MANUF ACTURE AND CLEARANCE OF FINISHED GOODS, A SEARCH OPERATION WAS CONDUCTED ON 14-15/09/2010 AT THE FACTORY AND RELATED PREMISES B Y THE OFFICERS OF DGCEI. DURING THE COURSE OF SEARCH SOME DISCREPA NCIES WERE NOTICED IN STOCK OF RAW MATERIALS AND FINISHED GOOD S. THE DETAILS OF THE PHYSICAL STOCK TAKING ARE AS FOLLOWS:- SL.NO. ITEM QUANTITY AS PER RECORDS (MT) ACTUAL QUANTITY AS PER PANCHNAMA (MT) DIFFERENCE VALUE (RS.) 1 INGOTS 1452.242 1137.386 (-) 314.856 72,41,688/- 2 MISS ROLLS 205.995 52.29 (-) 153.705 28,43,542/- 3 BILLETS 68.84 65.2 25 ( - )3.615 77,722/ - 4 FURNACE OIL 28.799 0 ( - ) 28.799 6,77,813/ - 5 SCRAP (EXCISABLE) 143.564 20.1 (-)125.464 22,58,352/- 6 SCRAP (NON - EXCISABLE) 0.625 371,23 (+)370.605 66,70,890/ - 7 RUNNER & 24.991 809 ( - )16.091 3,06,729/ - ITA NO. 555 &556/JP/2016 RAGHUVEER MENTAL INDUSTRIES LTD. VS. DCIT 16 RISER 8 SLAG 1821.881 5.85 (-)1816.031 90,801/- 9 TMT BARS 380.165 626.5 (+)246.335 70,49,861/- 5. THE EXCESS 246.333 M.T. OF TMT BARS VALUED AT RS.70,49,861/- WAS SEIZED ON 15.09.2010. SEARCH OF RESIDENTIAL PREMISES OF SHRI SUNIL POKHARNA, DIRECTOR OF RMIL, RESULTED INTO RECOVERY OF SOME DOCUMENTS AND CASH RS.63,20,000/-. FURTHER SEARCH AT RESIDENCE OF SHRI RAJKUMAR POKHARNA, DIRE CTOR, RESULTED IN RECOVERY OF SOME DOCUMENTS AND CASH RS.60 LACS. 6. SEARCH WAS ALSO CONDUCTED AT BUSINESS PREMISES O F M/S. RAJASTHAN COMMERCIAL HOUSE (RCH) AND M/S. RAJASTHAN STEELS (DEALER/DISTRIBUTOR OF RMIL), CASH OR RS.23 LAKHS A ND CERTAIN DOCUMENTS WERE RECOVERED. QUANTITY OF 32,55,29.4 M. T. OF KAMDHENU TMT BAR, VALUED AT RS.19,24,676/- WERE DET AINED. INVESTIGATION WAS ALSO CARRIED OUT WITH THE SUPPLIE RS OF RAW MATERIALS AND BUYERS OF THE FINISHED GOODS AND ALSO FROM THE TRANSPORTERS OF THE GOODS AND CERTAIN DOCUMENTS WER E RECOVERED AND RESUMED. FURTHER STATEMENTS OF PROPRIETOR/PARTNER/MANAGER/AUTHORISED PERSON/S ETC. WERE RECORDED. SOME OF THEM ADMITTED TO HAVE CLEARED UNA CCOUNTED RAW MATERIAL WITHOUT BILLS TO THE APPELLANT AND HAV ING RECEIVED PAYMENT IN CASH. SOME OF THE BUYERS OF THE FINISHED GOODS ADMITTED TO HAVE RECEIVED THE FINAL PRODUCTS WITHOU T INVOICE OR BILLS AND WITHOUT PAYMENT OF DUTY OF EXCISE. ITA NO. 555 &556/JP/2016 RAGHUVEER MENTAL INDUSTRIES LTD. VS. DCIT 17 7.INVESTIGATIONS WERE ALSO DONE AT THE PREMISES OF TWO TRANSPORTERS OF THE APPELLANT, NAMELY M/S KHAWAJA G ARIB NAWAJ TRANSPORT COMPANY, AJMER AND M/S VIKAS TRANSPORT CO MPANY, AJMER. NO CORRESPONDING INVOICE/BILL WAS FOUND TO B E ISSUED AGAINST SOME OF THE ENTRIES IN THE BOOKING REGISTER OF THE SAID TRANSPORTERS. FURTHER, FOR SOME OF THE GR'S, NO COR RESPONDING INVOICE WAS FOUND TO BE ISSUED. IN RESPECT OF INFOR MATION COLLECTED FROM THE COMMERCIAL TAX DEPARTMENT REVEAL ED THAT ENTRY IN RESPECT OF 162 VEHICLES AS PER SALE ENTRIES WERE NOT FOUND RECORDED IN APPELLANT'S RECORDS. FURTHER APPELLANT PURCHASED MATERIAL THROUGH THREE VEHICLES, WHICH WERE NOT REC ORDED IN THEIR RECORDS. 8. AS PER THE AGREEMENT DATED 01/07/2006 AND 22/09/ 2009 BETWEEN THE APPELLANT-RMIL AND KAMDHENUE ISPAT LTD. (M/S KIL), BHUWADI, ROYALTY WAS BEING PAID AT THE RATE OF RS. 150 PER M.T. THERE APPEARED TO BE EXCESS PAYMENT OF RS. 25,79,79 7/-, MADE DURING THE PERIOD APRIL 2008 TO OCTOBER 2008 AS COM PARED WITH THE CLEARANCES EFFECTED IN ER-1 RETURNS. THERE ALSO APPEARED TO BE SOME DISCREPANCY IN THE ELECTRICITY CONSUMPTI ON PATTERN VIS- A-VIS PRODUCT NORMS AS PER ER - 5 RETURNS. 9. SHOW CAUSE NOTICE DATED 11/03/2011 WAS ISSUED PR OPOSING CONFISCATION OF EXCESS TMT BAR SEIZED IN THE FACTOR Y PREMISES OF RMIL AND THE PROMISES OF ITS DEALER/DISTRIBUTOR RC H AND RAJASTHAN STEELS. FURTHER CONFISCATION OF INDIAN CU RRENCY OF RS. 63,20,000/-, RS. 60 LAIKHS AND RS. 23 LAKHS, SEIZED DURING ITA NO. 555 &556/JP/2016 RAGHUVEER MENTAL INDUSTRIES LTD. VS. DCIT 18 INVESTIGATION WAS PROPOSED TO BE CONFISCATED WITH P ROPOSAL TO IMPOSE PENALTY. 10. ANOTHER SHOW CAUSE NOTICE DATED 05/ 11/2011 WAS ISSUED DEMANDING CENTRAL EXCISE DUTY OF RS. 23,85,67,946/- WITH PROPOSAL TO APPROPRIATE RS. 2,13,50,500/- ALREADY DEPOSITED BY RMIL WITH INTEREST AND FURTHER PENALTY WAS PROPOSED UNDER SEC TION 11 AC ALONG WITH PENALTY UNDER RULE 25 AND ALSO UNDER RUL E 26 ON THE DIRECTORS & OTHERS. 11. THE SCN WAS ADJUDICATED ON CONTEST, VIDE THE IM PUGNED ORDER-IN-ORIGINAL DATED 31/12/2012 CONFIRMING THE D EMAND AND PENALTIES ALONG WITH CONFISCATION OF GOODS AND CURR ENCY AS MORE FULLY DESCRIBED HEREIN ABOVE. 12. THAT THE DETAILS OF THE DUTY DEMAND IS MORE FUL LY GIVEN HEREINABOVE. HOWEVER THE BREAKUP OF RS. 23,34,20,55 6/- IS (A) BASED ON APPELLANT ROYALTY ACCOUNT, AS PER BOOKS OF KIL- RS. 16,00,60,335/ AND (B) BASED ON ENTRIES IN THE BOOKING REGISTERS AND G R'S SEIZED FROM M/S NEW VIKAS TRANSPORT COMPANY AND M/S KHAWAJA GAR IB NAWAJ TRANSPORT COMPANY - RS. 7,33,57,221/-. 13. BEING AGGRIEVED THE APPELLANTS ARE IN APPEAL BE FORE THIS TRIBUNAL. WHEREAS THE REVENUE IS IN APPEAL AGAINST DROPPING OF CHARGE OF CLANDESTINE CLEARANCE ON ACCOUNT OF DUPLI CATION OF DEMAND. ITA NO. 555 &556/JP/2016 RAGHUVEER MENTAL INDUSTRIES LTD. VS. DCIT 19 14. THE LEARNED COUNSEL FOR THE APPELLANT MR. B.L. NARSIMHAN URGES, WITH REGARD TO THE DEMAND OF RS. 16,00,60,33 5/- BASED ON ROYALTY PAYMENTS AS FOLLOWS: - THE LEARNED COMMISSIONER HAVE RECORDED THE FINDING THAT THE PAYMENT (CREDIT) OF RS. 4 LAKHS ON 04/04/2008 AS RO YALTY BY APPELLANT TO KIL AND AGAIN DEBIT OF RS. 4,28,104/- ON 30/04/2008, IN APPELLANTS ACCOUNT WITH KIL SHOWS TH AT THE TOTAL ROYALTY PAYMENT FOR THE MONTH OF APRIL 2008 WAS RS. 8,29,441/-, AS AGAINST ROYALTY PAYMENT OF RS. 4 LAKHS ONLY RECO RDED IN THE APPELLANT'S ACCOUNT. THERE IS NO SUBSTANCE IN THE S UBMISSION THAT PAYMENT OF RS. 4 LAKHS ON 04/04/2008 WAS ADVAN CE AGAINST THE ACTUAL 'ROYALTY DUE' ENTRY OF RS. 4,28,104/- MA DE ON 30 APRIL, 2008, SINCE THE APPELLANT HAVE NOT PRODUCED ANY VOU CHERS IN SUPPORT OF SUCH CONTENTION. IT WAS FURTHER OBSERVED BY THE COMMISSIONER THAT IT IS HIGHLY UNLIKELY THAT THE AP PELLANT WOULD SHOW ANY ROYALTY PAYMENT ON PAPER, WITH RESPECT TO CLANDESTINELY REMOVED KAMDHENU BRAND TMT BARS, SI NCE IT WOULD ENHANCE THEIR CHANCES OF BEING CAUGHT DURING SCRUTINY. SUCH EXCESS PAYMENT OF ROYALTY WOULD ONLY HAVE BEEN AVAILABLE IN THE RECORDS/BOOKS OF KIL. THE LEARNED COUNSEL STATES THAT THE APPELLANT'S ACC OUNT IN THE BOOKS OF KIL SEIZED BY THE DEPARTMENT - RUD 88, REF LECTS THE ENTRIES FOR ROYALTY DUE AND PAID. WHEN THE ROYALTY AMOUNT IS ACTUALLY PAID BY THE APPELLANT DURING THE MONTH, IT 'S ACCOUNT, IN KIL BOOKS IS CREDITED AND WHEN THE ROYALTY INCOME I S RECOGNISED/DUE IN THE BOOKS OF KIL, THE APPELLANT'S ACCOUNT IS ITA NO. 555 &556/JP/2016 RAGHUVEER MENTAL INDUSTRIES LTD. VS. DCIT 20 DEBITED. THIS IS HOW THE ACCOUNT OF APPELLANT IS MA INTAINED BY KIL IN ITS BOOKS OF ACCOUNT. HOWEVER, THE DEPARTMEN T HAVE WRONGLY INTERPRETED IT BY TREATING BOTH THE ROYALTY DUE AS WELL AS ROYALTY PAID AMOUNTS EVERY MONTH APPEARING IN TH E LEDGER ACCOUNT OF THE APPELLANT IN THE BOOKS OF THE KIL, A S SEPARATE PAYMENTS OF ROYALTY BY THE APPELLANT TO KIL. THE LE ARNED COMMISSIONER LOST SIGHT OF THE FACT THAT THE ACCOUN T OF THE APPELLANT WAS CREDITED WITH THE ROYALTY PAYMENT ENT RY DATED 04/04/2008, FOR RS. 4 LAKHS, AND DEBITED WITH ROYAL TY DUE ENTRY DATED 30/04/2008, FOR RS. 4,28,104/-. THUS, THESE T WO, AMOUNTS ONE BEING DEBIT AMOUNT OTHER BEING CREDIT AMOUNT CA NNOT BE ADDED TO GET TOTAL ROYALTY PAID BY THE APPELLANT. T HELEARNED COUNSEL ALSO DEMONSTRATED THIS IN THE COURSE OF HEA RING. REFERRING TO THE SEIZED DOCUMENT BEING ACCOUNT OF A PPELLANT IN THE BOOKS OF KIL-RUD 88. 15. FURTHER, THE LEARNED COUNSEL ALSO URGES THAT AT THE END OF KIL THERE IS NO PROOF OF RECEIPT OF EXTRA CONSID ERATION RELATION TO THE ALLEGED EXCESS ROYALTY, RECORDED IN THEIR BOOKS OF ACCOUNT (AS PER REVENUE). 16. HAVING CONSIDERED THE RIVAL CONTENTIONS, WE AR E SATISFIED THAT THE DEPARTMENT HAVE WRONGLY READ THE ACCOUNT OF THE APPELLANT IN THE BOOKS OF KIL. IT IS EVIDENT THAT BOTH THE TRANSACTION ON THE DEBIT COLUMN AND THE CREDIT COLUMN HAVE BEEN ADDED, ARRIVING AT ERRONEOUS CONCLUSION. THUS, WE HOLD THAT THE SHOW CAUSE NOTICE WITH RESPECT TO THE DEMAND OF RS. 16,00,60,335/- IS ERRONEOUS AND NOT SUSTAINABLE. AC CORDINGLY, WE ITA NO. 555 &556/JP/2016 RAGHUVEER MENTAL INDUSTRIES LTD. VS. DCIT 21 SET ASIDE THE DEMAND OF RS. 16,00,60,335/- IN RESPE CT OF ROYALTY PAYMENTS BY APPELLANT TO KIL, AND REMAND THE MATTER TO THE LEARNED COMMISSIONER FOR RE-VERIFICATION OF THE MIS TAKE IN CALCULATION, APPARENT ON THE FACE OF RECORD. 17. FURTHER THE LD. COUNSEL FOR THE APPELLANT SUBMI TTED ON THE ISSUE OF, STOCK VERIFICATION AND RELATED FINDINGS O F LD. COMMISSIONER, THAT NO ACTUAL STOCK TAKING WAS DONE BY THE OFFICERS AND THE STATEMENTS RECORDED DURING SEARCH AND INVESTIGATION WERE UNDER PRESSURE, IS NOT CORRECT. THIS IS CLEAR FROM THE IMMEDIATE AND REPEATED RETRACTION FILED BY APPELLANTS BEFORE DGCEI & OTHERS. FURTHER, ONE SHRI DAULAT RAM , ONE OF THE PANCHAS STATED THAT HE DID NOT WITNESS THE PANCHNAM A PROCEEDINGS AND WAS CALLED ONLY AT THE END OF SEARC H FOR AN HOUR TO SIGN THE STATEMENTS. THE ENTIRE PANCHANAMA LOSES ITS CREDIBILITY AND BECOMES VOID. HE ADDED THAT WHEN PANCHANAMA PRO CEEDINGS ITSELF IS DOUBTFULL, ENTIRE CASE OF THE DEPARTMENT BASED ON SUCH PANCHANAMA WILL NOT BE SUSTAINABLE. THE CROSS-EXAMI NATION OF SHRI DAUALT RAM ALSO SUPPORTS THE CREDENCE TO RETRA CTIONS MADE BY THE DIRECTORS/EMPLOYEES OF THE APPELLANT ON 16.0 9.2010. 18. HE FURTHER EMPHASIZED THAT THERE IS NO CORROBOR ATIVE EVIDENCE TO PROVE THAT THE ACTUAL STOCK TAKING WAS UNDERTAKEN BY THE OFFICERS IN ABSENCE OF WEIGHMENT SLIPS, DETAILS OF VEHICLES USED FOR WEIGHMENT, PAYMENTS TO LABOUR USED FOR WEI GHMENT, ETC. ITA NO. 555 &556/JP/2016 RAGHUVEER MENTAL INDUSTRIES LTD. VS. DCIT 22 19. IN SUCH CIRCUMSTANCES, NO CHARGE OF SHORTAGE/EX CESS OF FINISHED GOODS, OR OF CLANDESTINE CLEARANCE THEREOF , IS SUSTAINABLE. IN THIS REGARD, RELIANCE WAS PLACED ON THE FOLLOWIN G JUDGMENTS:- CCE, RAIPUR, V. DEVI IRON & POWER PVT. LTD., 2015 ( 321) E.L.T. 270 ( TRI. DEL.) CCE, MEERUT-I V. SILVERTONE PAPERS LTD., 2013 (287) E.L.T. 478 ( TRI. DEL.) HISSAR PIPES PVT. LTD. V. CCE, ROHTAK, 2015 (317) E.L.T. 136 ( TRI. DEL.) 20. HE ALSO ASSERTED THAT EVEN THE EXPERTISE OF THE EMPLOYEES COULD NOT HAVE LED TO WEIGHMENT OF AROUND 2200 MT O F STOCK WITHIN THE SHORT SPAN OF 15 HOURS, TAKEN IN THE PANCHANAMA PROCEEDINGS, SINCE THE TIME REQUIRED TO LOAD, UNLOAD AND WEIGH T HE VEHICLE COULD NOT BE CURTAILED. SUCH STOCK TAKING REQUIRED AROUND 228 TRUCK LOADS OF 10 MT PER TRUCK. 21. THE SECOND PANCHA, SHRI PRAVEEN KUMAR COULD NO T BE PRODUCED BY REVENUE FOR CROSS-EXAMINATION, EVEN THO UGH THE APPELLANT HAD REQUESTED FOR THE SAME. HAD HE BEEN P RODUCED, HE WOULD ALSO HAVE GIVEN SIMILAR STATEMENTS AS MADE BY SHRI DAULAT RAM, DURING THE CROSS-EXAMINATION. 22. THAT FURTHER AS REGARDS, THE ASSUMPTION OF THE DEPARTMENT THAT EACH TEST NOTED IN THE NOTEBOOK OF CHEMIST WAS ONE HEAT, AND MULTIPLYING THE NUMBER OF HEATS WITH THE CAPACITY OF FURNACE, AND ACCORDINGLY DRAWING OF CONCLUSION THAT 2409 MT OF PRODUCTION TOOK PLACE DURING THE PERIOD OF DISPUTE, AS AGAINST ITA NO. 555 &556/JP/2016 RAGHUVEER MENTAL INDUSTRIES LTD. VS. DCIT 23 RECORDED QUANTITY OF 1229 MT, HE SUBMITTED THAT THE RE IS NO BASIS WHATSOEVER FOR THE ABOVE ASSUMPTION. HE SUBMI TTED THAT MULTIPLE TESTS ARE REQUIRED TO BE CONDUCTED DURING ONE HEAT OF THE FINISHED GOODS, IF IT DOES NOT CONFORM TO DESIR ED QUALITY AND REMEDIAL MEASURE ARE TAKEN. HE ADDED THAT EVEN IN ITS REPLY TO SHOW CAUSE NOTICE THE APPELLANT HAD SUBMIT TED THAT THE SAID NOTE BOOK DID NOT REFLECT THE NUMBER OF HE ATS OF THE FURNACE. THE ENTRIES MERELY REFLECT THE CHEMICAL TE ST UNDERTAKEN BY THEIR CHEMIST. THIS WAS ALSO STATED B Y SHRI SUNIL POKHARNA, DIRECTOR DURING THE COURSE OF INVES TIGATION. FURTHER, NO STATEMENT OF NAVEEN TYAGI, WHO MAINTAIN ED THE SAID DIARY, WAS RECORDED WHICH IS A SERIOUS LAPSE O F INVESTIGATION. THE AFFIDAVIT OF NAVEEN TYAGI SUBSTA NTIATES THE EXPLANATION OF THE APPELLANT. THEREFORE, HE SUBMITT ED THAT NO CLANDESTINE MANUFACTURE OR CLEARANCE COULD BE PROVE D ON THIS GROUND. 23. HE FURTHER SUBMITTED THAT THE ALLEGATION OF CLA NDESTINE CLEARANCE CAN BE CONFIRMED ONLY ON THE BASIS OF POS ITIVE AND TANGIBLE EVIDENCE, AND THE SAME CANNOT BE BASED ON MERE PRESUMPTIONS AND ASSUMPTIONS. IN SUPPORT OF THIS SU BMISSION, HE PLACED RELIANCE ON FOLLOWING DECISIONS: CONTINENTAL CEMENT COMPANY V. UOI, 2014 (309) ELT 4 11 (ALL.)CCE V. BRIMS PRODUCTS, 2011 (271) ELT 184 (PA T.) CCE, CHANDIGARH-I V. LAXMI ENGINEERING WORKS, 2010 (254) E.L.T. 205 (P & H) ITA NO. 555 &556/JP/2016 RAGHUVEER MENTAL INDUSTRIES LTD. VS. DCIT 24 ASHUTOSH METAL INGLILSTRIES V. CCE&ST, DELHI, F.O. NO. 50477/2017-CU[DBL.DATED 25.01.2017 NABHA STEELS LTD. V. CCE, CHANDIGARH, 2016 (344) E. L.T. 561 (TRI. - CHAN.) SUNRISE FOOD PRODUCTS & ORS. V. CCE, DELHI, 2017 (1 ) TMI 84 - CESTAT NEW DELHI M/S. S.H. HARYANA WIRES LTD. & ORS. V. CCE, FARIDAB AD, 2016 (10) TMI 449 - CESTAT NEW DELHI 24. THAT THE ENTIRE FINDING IS LEGALLY UNTENABLE ON ACCOUNT OF THE FACT THAT THE LD. COMMISSIONER AT THE END OF PA RA 16 ( OF ORDER- IN-ORIGINAL) HAS HELD THAT NO CENVAT CREDIT DEMAND COULD BE CONFIRMED AGAINST THE APPELLANT ON THIS GROUND IN T HE ABSENCE OF ANY ATTEMPT FROM THE DEPARTMENT TO QUANTIFY THE AMOUNT. THUS, THE INVESTIGATION ON THIS POINT APPEARS TO BE WAY-WARD AND MIS-DIRECTED. 25. FURTHER, THERE IS NO LOGIC IN BUYING SCRAP WITH OUT BILLS FROM A PARTY, AND THEREAFTER, IN SUBSEQUENT INVOICE S INFLATING THE QUANTITY VIS-A-VIS THE SCRAP SUPPLIED. THIS FIN DING IN ITSELF DESTROYS THE CASE OF THE DEPARTMENT. THERE IS NO EV IDENCE REGARDING HOW THE SCRAP WITHOUT INVOICES WAS TRANSP ORTED TO THE APPELLANT. 26. HE ALSO POINTED OUT THAT FOR THE ALLEGED CLANDE STINE PRODUCTION AND CLEARANCE OF 42,300 MT OF FINISHED P RODUCTS, THE APPELLANT WOULD HAVE REQUIRED AROUND 47,000 MT OF SCRAP. THE IMPUGNED ORDER VAGUELY AND WITHOUT EVIDENCE MER ELY COULD UPHOLD ONLY 2230 MT, AS UNACCOUNTED PROCUREME NT OF SCRAP. THERE IS NO EVIDENCE LED BY THE DEPARTMENT T O PROVE ITA NO. 555 &556/JP/2016 RAGHUVEER MENTAL INDUSTRIES LTD. VS. DCIT 25 SUCH HUGE QUANTITY OF UNACCOUNTED SCRAP PROCUREMENT BY THE APPELLANT AND THE OTHER RELEVANT NECESSARY OVERHEAD S/FACTORS OF PRODUCTION REQUIRED FOR THEIR CONVERSION LIKE LA BOUR COSTS, ELECTRICITY, FUEL, CONSUMABLES, ETC. 27. AS REGARDS, THE DEMAND OF RS. 7,33,57,221/- BAS ED ON SIX BOOKING REGISTERS AND LOOSE GRS OF THE TRANSPOR TER(S) IS CONCERNED, LD. COUNSEL SUBMITTED THAT SHRI MOIN KHA N (TRANSPORTER) HIMSELF STATED DURING CROSS-EXAMINATI ON IN RESPONSE TO QUESTION 11 & 12, THAT THE BOOKING REGI STER REFLECTS ONLY THE APPROXIMATE REQUIREMENT WHEREAS T HE ACTUAL WEIGHT IN KG IS KNOWN AFTER THE ACTUAL LOADING OF G OODS ONLY. FURTHER, IN RESPONSE TO QUESTIONS 8 & 9, HE HAD ALR EADY STATED THAT ALL THE ENTRIES MENTIONED IN THE BOOKIN G REGISTER MAY NOT HAVE BEEN ACTUALLY TRANSPORTED. THUS, ON A CONJOINT READING OF THE RESPONSES GIVEN BY SHRI MOIN KHAN TO THE CROSS-EXAMINATION, IT CLEARLY EMERGES THAT ENTRIES IN BOOKING REGISTER DID NOT REFLECT ACTUAL TRANSPORTATION OF T MT/FINISHED GOODS. 28. THE REVENUE HAS ALLEGED THAT THE BOOKING REGIS TER CONTAINED ALL THE BOOKINGS MADE BY VARIOUS PARTIES, INCLUDING THE APPELLANT, WITH I1 IT TRANSPORTER. NON-APPEARAN CE OF THE ENTRIES IN THE BOOKING REGISTERS CORRESPONDING TO T HE LOOSE GRS, ON THE BASIS OF WHICH DEMAND OF RS.22,60,412/- HAS BEEN CONFIRMED IN THE IMPUGNED ORDER, IN ITSELF REF LECTS THE INCONSISTENCY AMONG THE RECORDS (HOOKING REGISTER A ND THE LOOSE GRS) RESUMED FROM THE TRANSPORTER WHICH HAVE BEEN ITA NO. 555 &556/JP/2016 RAGHUVEER MENTAL INDUSTRIES LTD. VS. DCIT 26 RELIED UPON BY THE DEPARTMENT. THUS, THE EVIDENTIAR Y VALUE OF THESE RECORDS BECOMES DOUBTFUL. A BARE LOOK AT THE BOOKING REGISTER WOULD AMPLY EVINCE THE FACT THAT THE SAME IS NOTHING BETTER THAN A ROUGH RECORD.. HE ADDED THAT THESE SU BMISSIONS WERE GIVEN EVEN DURING THE REPLY TO THE SCN, HOWEVE R, THE SAME HAS NOT BEEN CONSIDERED BY THE LD. COMMISSIONE R . THIS STAND OF THE APPELLANT IS NOT AN AFTER-THOUGH. RATHER THIS IS BASED ON THE CROSS-EXAMINATION OF SHRI MOIN KHAN PROPRIETOR OF THE TRANSPORT ENTITIES, WHOSE STATEME NTS WERE RELIED UPON BY THE DEPARTMENT. THE RESPONSES TO THE QUESTIONS 8, 9 AND 14 OF THE CROSS-EXAMINATION SUPPORTS THEIR CONT ENTION. 29. IT HAVE BEEN HELD BY THIS TRIBUNAL REPEATEDLY T HAT CHARGE OF CLANDESTINE CLEARANCE CANNOT BE CONFIRMED MERELY ON THE BASIS OF THIRD PARTY RECORDS, IN THE ABSENCE OF ANY CORRO BORATIVE EVIDENCE. LD. COUNSEL PLACED RELIANCE ON FOLLOWING DECISIONS: BHAWANI MOULDERS PVT. LTD. 00 ORS. V. CCE, RAIPUR, 2017 (1) TMI 493 - CESTAT NEW DELHI M/S. N.R. SPONGE PVT. LTD. V. CCE&ST, RAIPUR, 2015- TIOL-1600- CESTAT-DEL ALBRIGHT STEEL INDUSTRIES LTD. V. CCE, RAIPUR, 2015 (322) E.L.T. 542 (TRI. - DEL.) SAKEEN ALLOYS PVT. LTD. V. CCE, AHMEDABAD, 2013 (29 6) E.L.T. 392 (TRI. - AHMD.), AS MAINTAINED BY THE HON 'BLE GUJARAT HIGH COURT IN CCE V. SAKEEN ALLOYS PVT. LTD ., 2014 (308) E.L.T. 655 (GUJ.) ITA NO. 555 &556/JP/2016 RAGHUVEER MENTAL INDUSTRIES LTD. VS. DCIT 27 CCE, INDORE V. RAJRATAN SYNTHETICS LTD., 2013 (297) E.L.T. 63 (TRI. - DEL.) 30. LD. AR HAVE REITERATED THE FINDINGS IN THE IMPU GNED ORDER. REGARDING ROYALTY HE SUBMITTED THAT PAYMENTS OF RS. 4,00,000/- ON 04.04.2008 AS ROYALTY BY THE APPELLANT TO KAMDHENU AND AGAIN DEBIT OF RS. 4,28,104/- ON 30.04.2008 IN APPELLANT' S ACCOUNT WITH KAMDHENU SHOWS THAT THE TOTAL ROYALTY PAYMENT FOR T HE MONTH OF APRIL 2008 WAS RS. 8,29,441/-, AS AGAINST ROYALTY P AYMENT OF RS. 4,00,000/- ONLY RECORDED IN THE APPELLANT'S ACCOUNT . THERE IS NO SUBSTANCE IN THE SUBMISSION THAT PAYMENT OF RS. 4,0 0,000/- ON 04.04.2008 WAS ADVANCE AGAINST THE ACTUAL ROYALLY D UE ENTRY OF RS. 4,28,104/- MADE ON 30.04.2008. 31. IT-IS HIGHLY UNLIKELY THAT THE APPELLANT WOULD SHOW ANY ROYALTY PAYMENT ON PAPER WITH RESPECT TO CLANDESTINELY REMO VED KAMDHENU BRAND TMT BARS SINCE IT WOULD ENHANCE THEIR CHANCES OF BEING CAUGHT DURING SCRUTINY. SUCH EXCESS PAYMENT OF ROYA LTY COULD ONLY HAVE BEEN AVAILABLE IN THE RECORDS OF M/S KAMDHENU ISPAT LTD. THEREFORE, THE LD. COMMISSIONER HAS CORRECTLY CONFI RMED THE DEMAND OF CLANDESTINE CLEARANCE IN THIS REGARD. 32. FURTHER, IN THE MATTER OF DEMAND BASED ON SIX B OOKING REGISTER AND LOOSE GR OF THE TRANSPORTER, LD. AR SUBMITTED T HAT ON THE BASIS OF CROSS EXAMINATION OF MR. MOIN KHAN, PROPRIETOR O F THE TRANSPORT ENTITIES, THE APPELLANT ARGUED THAT ALL THE BOOKING S MADE IN THE MORNING BY THE APPELLANT WHICH WERE REFLECTED IN TH E BOOKING REGISTER MAY NOT BE FINALLY TRANSPORTED. ITA NO. 555 &556/JP/2016 RAGHUVEER MENTAL INDUSTRIES LTD. VS. DCIT 28 33. HE SUBMITTED THAT THE ARGUMENTS OF THE APPELLAN T THAT SINCE THE BOOKING REGISTER DID NOT REFLECT WEIGHT I N KG BUT ONLY IN TONNES OR HALF TONNES, THUS, SAME CANNOT BE TAKEN TO BE THE KAMDHENU TMT ACTUALLY TRANSPORTED, CANNOT BE AC CEPTED BECAUSE AT THE TIME OF BOOKING THE ACTUAL WEIGHT CO ULD NOT HAVE BEEN KNOWN, WHICH WAS KNOWN ONLY AT THE TIME OF ACT UAL STUFFING AND WRITTEN ON GRS/ BILTIES ACCOMPANYING THE GOODS. FURTHER, THE OFFICE COPIES OF GRS ALSO DID NOT MENTION ACTUAL WE IGHT, FOR THIS REASON ONLY. 34. HE ASSERTED THAT GRS PREPARED BY M/S NEW VIKAS TRANSPORT COMPANY WHICH ARE NOT REFLECTED IN THE BOOKING REGI STER FURTHER FALSIFIES THE STAND TAKEN BY THE APPELLANT THAT ALL ENTRIES MADE WITH RESPECT TO KAMDHENU TMT IN THE BOOKING RE GISTER ARE NOT ACTUALLY TRANSPORTED. ON THE CONTRARY, THESE GR S FURTHER REFLECT THE CLANDESTINE CLEARANCES OF GOODS BY THE APPELLAN T. 35. THE STAND OF THE APPELLANT THAT ALL BOOKINGS RE FLECTED IN THE BOOKING REGISTER OF THE TRANSPORTER AND FOR WHICH G RS WERE PREPARED MAY NOT HAVE BEEN ACTUALLY TRANSPORTED IS NOT ACCEPTABLE AND HAS TO BE CONSIDERED AS AN AFTER-THOUGHT. REGARDING OTHER OBSERVATION OF THE COMMISSIONER TO CONFIRM THE CHARGE OF CLANDESTINE MANUFACTURE AND CLEARANCE AGA INST THE APPELLANT, THE LD. AR SUBMITTED THAT PHYSICAL STOCK TAKING LEADING TO SHORTAGE AND EXCESS OF RAW MATERIAL IN THE FACTORY WAS DONE IN THE PRESENCE OF THE EMPLOYEES OF THE FACTORY. AS PER TH E CROSS EXAMINATION OF SHRI DAULAT RAM, EVEN IF HE WAS PRES ENT IN THE ITA NO. 555 &556/JP/2016 RAGHUVEER MENTAL INDUSTRIES LTD. VS. DCIT 29 FACTORY ONLY FOR AN HOUR AND DID NOT WITNESS THE PH YSICAL STOCK TAKING, THIS DOES NOT MEAN THAT STOCK TAKING DID NO T TAKE PLACE. THE EMPLOYEES OF THE APPELLANT HAD EXPERTISE IN WEI GHMENT WHICH MUST HAVE BEEN RELIED UPON BY THE OFFICERS. 36. HE FURTHER SUBMITTED THAT AS DETAILED IN PARA 1 9-24 OF THE SCN DATED 25.11.2011, IT HAS BEEN CLEARLY BROUGHT O UT FROM THE `PAYAL EXPORT QUALITY EX. NOTE BOOK (RUD-22)' T HAT THE APPELLANT WAS TAKING MORE HEATS FROM THE INDUCTION FURNACES THAN WHAT THEY WERE REFLECTING IN THEIR STATUTORY R ECORDS, THUS, THIS REFLECTS CLANDESTINE PRODUCTION BY THE A PPELLANT. 37. AS PER PARA 63 OF THE SCN, CERTAIN SUPPLIERS HA VE CONFIRMED THAT THEY SUPPLIED NON-CENVATABLE SCRAP WITHOUT BIL LS TO THE APPELLANT ON CASH BASIS AND WERE RAISING INVOICES F OR THREE TIMES THE QUANTITY OF SCRAP ACTUALLY SUPPLIED UNDER THE CENVATABLE INVOICES. 38. AS PER PARA 36-61 OF THE SCN, IT COMES OUT THAT THE APPELLANT WAS PROCURING CENVATABLE SCRAP BY SHOWING HIGHER QUANTITY OF SCRAP THAN WHAT WAS ACTUALLY SUPPLIED B Y RAW MATERIAL SUPPLIERS AND NON CENVATABLE SCARP FROM MA RKET WITHOUT BILLS BY MAKING CASH PAYMENTS AND WITHOUT R ECORDING THE SCRAP SO OBTAINED IN THEIR STATUTORY RECORDS. 39. WE HAVE HEARD BOTH THE SIDES AND HAVE PERUSED T HE APPEAL RECORDS AND WRITTEN SUBMISSION GIVEN BY BOTH THE SI DES ITA NO. 555 &556/JP/2016 RAGHUVEER MENTAL INDUSTRIES LTD. VS. DCIT 30 40. ON THE FIRST ISSUE, REGARDING PHYSICAL VERIFICA TION OF STOCK WE OBSERVE THAT SUCH EXERCISE WAS CHALLENGED BY THE AP PELLANT IMMEDIATELY AFTER SEARCH, THE PANCHA WITNESS SHRI DAULAT RAM DURING CROSS EXAMINATION CO NFIRMS NOT UND ERTAKING OF STOCK TAKING EXERCISE. DURING SUBSEQUEN T STATEMENTS THE APPELLANT OR ITS DIRECTORS WERE NEVER AGAIN CONFRONTED ON THE ASPECT OF RETRACTIONS AND FROM THIS W E FIND FORCE IN THE APPELLANTS ARGUMENTS THAT NO SU CH STOCKTAKING WAS ACTUALLY CLONE. FURTHER, IT CAN ALSO BE UNDERSTOOD THAT STOCK OF APPROXIMATE LY 2200 TONS OF S TEEL (APPROXIMATELY 228 TRUCKS LOAD) CANNOT BE UNDE RTAKEN IN THE TO TAL DURATION OF 15 HOURS.THEREFORE, THIS FINDING OF THE COMMISSIONER IS NOT SUSTAINABLE. 41. WE ALSO OBSERVE THAT LD. COMMISSIONER'S FINDING THAT EACH TEST RECORDED IN THE DIARY OF CHEMIST IS ONE HEAT A ND CALCULATING TOTAL PRODUCTION BY AN ARITHMETIC CALCU LATION IS NOT SUSTAINABLE IN VIEW OF THE SPECIFIC STATEMENT O F THE DIRECTOR DURING INVESTIGATION AND NOT RECORDING OF THE ANY S TATEMENT OF THE CHEMIST WHO HAD MADE ENTRIES IN THE SAID DIARY. FURTHER, IT IS A LEGALLY SETTLED POSITION THAT NO DEMAND FOR CL ANDESTINE MANUFACTURE CAN BE SUSTAINED BASED ON THEORETICAL A ND UNCORROBORATED CALCULATIONS. 42. ON THE ISSUE OF CLANDESTINE REMOVAL BASED ON RE GISTER OF VEHICLES BOOKING MAINTAINED BY NEW VIKAS. TRANSPORT COMPANY WE FIND FORCE IN THE APPELLANTS ARGUMENTS THAT THES E ARE NOT RECORD OF VEHICLES ACTUALLY TRANSPORTED BUT ONLY A MEMORANDA ITA NO. 555 &556/JP/2016 RAGHUVEER MENTAL INDUSTRIES LTD. VS. DCIT 31 RECORD OF BOOKINGS RECORDED BY TRANSPORTER FOR APPR OXIMATE VEHICLES TO THE SUPPLIED TO THE APPELLANT. THIS IS VERY CLEAR FROM THE RECORD OF CROSS EXAMINATION OF THE TRANSPORTER MOIN KHAN, WHICH LEAVES NO ROOM FOR ANY OTHER INTERPRETATION A ND THEREFORE ANY SUCH DEMAND IS NOT SUSTAINABLE. THIS ALSO APPLIES TO THE DEMAND BASED ON LOOSE CRS. 43. THE SUBSTANTIAL DEMAND BASED ON THE LEDGER ACCO UNT OF ROYALTY AMOUNT, RESUMED FROM THE PREMISES OF KAM DHENU ISPAT LTD., WE OBSERVE THAT AS PER THE BASIC PRINCI PLE OF THE ACCOUNTING THE ENTRIES IN THE DEBIT SIDE AND CREDIT SIDE OF LEDGER CANNOT BE TOTALED TOGETHER. A PERUSAL OF LED GER RESUMED FROM KAMDHENU ISPAT LTD SHOWS SEPARATE COLUMN FOR D EBIT AND CREDIT AMOUNT WHEREAS REVENUE HAS PUT THE AMOUNT OF DEBIT COLUMN AS WELL AS CREDIT COLUMN IN ONE SINGLE COLUM N AND THEN TOTALED IT, WHICH IS NEARLY DOUBLED BECAUSE OF WRON G MERGING OF THE DEBIT SIDE AND CREDIT SIDE COLUMN. IN OUR VI EW ANY CONFIRMATION OF DEMAND BASED ON SUCH DOUBLING OF AM OUNT(S) CANNOT BE SUSTAINED. THERE IS NO PLAUSIBLE REASONIN G GIVEN BY, REVENUE IN SUPPORT OF TOTALING OF DEBIT AMOUNT AND CREDIT AMOUNT, WHILE CALCULATING DEMAND OF DUTY BECAUSE OF DIFFERENCE IN ROYALTY. FURTHER, NOT RECORDING OF ST ATEMENT OF KANDHENUE ISPAT LTD, ON SUCH RESUMED LEDGER ACCOUNT , ALSO SHOWS THAT HERE IS NO SUBSTANCE IN THE FINDING OFTH E REVENUE THAT ALLEGED DIFFERENCE IN ROYALTY LEADS TO CLANDES TINE CLEARANCES. ITA NO. 555 &556/JP/2016 RAGHUVEER MENTAL INDUSTRIES LTD. VS. DCIT 32 44. TO SUM UP, THE APPEAL NO. E/56611 OF 2013 IS AL LOWED IN PART OF FOLLOWS- (A) THE DEMAND OF RS. 7,33,57,221/- IS SET ASIDE; (B) THE DEMAND OF RS. 16,00,60,335/- IS SET ASIDE A ND REMAND TO THE LEARNED COMMISSIONER, FOR RE-VERIFICATION, I N TERMS OF DIRECTIONS AND OBSERVATIONS HEREINABOVE; (C) ORDER OF CONFISCATION OF CASH AND GOODS IS SET ASIDE; (D) ALL PENALTIES STAND DELETED; (E) APPELLANT IS ENTITLED TO CONSEQUENTIAL BENEFIT( S). 45. ALL OTHER APPEALS ARE ALLOWED WITH CONSEQUENTIA L BENEFITS. 13. IN LIGHT OF ABOVE FINDINGS OF CESTAT WHERE THE WHOLE DEMAND RELATING TO CLANDESTINE MANUFACTURE AND CLEARANCE O F FINISHED GOODS HAS BEEN SET-SIDE, THE FINDINGS OF THE AO WHICH ARE SOL ELY BASED ON THE PROCEEDINGS UNDER CENTRAL EXCISE THEREFORE DOESNT SURVIVE AND THE CONSEQUENTIAL ADDITION MADE BY HIM ARE LIABLE TO BE DELETED. AT THE SAME TIME, THE REVENUE WOULD BE AT LIBERTY TO TAKE ACTION AS PER LAW WHERE THE MATTER SO DECIDED BY THE CESTAT IS APPEAL ED AGAINST BY THE REVENUE AND IS DECIDED IN ITS FAVOUR BY THE COURTS. WE FIND THAT THE SIMILAR ISSUE HAS BEEN DECIDED BY THE COORDINATE BE NCH IN CASE OF M/S NATANI ROLLING MILLS PVT. LTD. VS. ITO (IN CO NO. 29 & 30/JP/2019 ARISING ITA NO. 555 &556/JP/2016 RAGHUVEER MENTAL INDUSTRIES LTD. VS. DCIT 33 OUT OF ITA NO. 537 & 538/JP/2018 DATED 11.08.2019) WHEREIN THE RELEVANT FINDINGS READ AS UNDER:- 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND PURSUED THE MATERIAL AVAILABLE ON RECORD. AS WE HAVE NOTED ABOVE, THE W HOLE CASE OF THE REVENUE REGARDING UNDISCLOSED SALES REST ON THE ORDERS OF THE CENTRAL EXCISE AUTHORITIES WHICH HAS SINCE BEEN SET -ASIDE BY THE CESTAT VIDE ITS ORDER DATED 7.02.19. IN VIEW OF TH E SAME, THE ADDITIONS SO MADE BY THE ASSESSING OFFICER TOWARDS GROSS PROFIT ON UNRECORDED SALES AND UNACCOUNTED PURCHASES IS DI RECTED TO BE DELETED. AT THE SAME TIME, THE REVENUE WOULD BE AT LIBERTY TO TAKE ACTION AS PER LAW WHERE THE MATTER SO DECIDED BY THE CESTAT IS APPEALED AGAINST BY THE REVENUE AND IS DE CIDED IN ITS FAVOUR. IN THE RESULT, THE GROUND NO. 1, 1.1 AND 2 IN ASSESSEES CROSS OBJECTION IS DECIDED IN FAVOUR OF THE ASSESSE E. 14. IN THE RESULT, MATTER IS DECIDED IN FAVOUR OF T HE ASSESSEE AND THE APPEAL OF THE ASSESSEE IS THUS ALLOWED. ITA NO. 556/JP/2016 15. FOR ASSESSMENT YEAR 2011-12, BOTH THE PARTIES FAIRLY SUBMITTED THAT THE FACTS AND CIRCUMSTANCES OF THE CASE ARE EX ACTLY IDENTICAL AND BASIS THE AFORESAID SEARCH PROCEEDINGS BY DGCEI UND ER THE CENTRAL EXCISE REGARDING THE MANUFACTURE AND CLANDESTINE RE MOVAL OF FINISHED GOODS, THE ASSESSING OFFICER HAS MADE THE ADDITIONS IN THE HANDS OF THE ASSESSEE BY REJECTING THE BOOKS OF ACCOUNTS OF THE ASSESSEE. THEREFORE, CONSIDERING THE SUBMISSION OF BOTH THE P ARTIES AND PERUSAL OF ITA NO. 555 &556/JP/2016 RAGHUVEER MENTAL INDUSTRIES LTD. VS. DCIT 34 RECORDS, OUR FINDINGS AND DIRECTIONS CONTAINED IN I TA NO. 555/JP/2016 SHALL APPLY MUTATIS MUTANDIS TO THIS APPEAL AND THE MATTER IS DECIDED IN FAVOUR OF THE ASSESSEE. IN THE RESULT, BOTH THE APPEALS FILED BY THE ASSES SEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 12/03/2020. SD/- SD/- FOT; IKY JKO FOE FLAG ;KNO (VIJAY PAL RAO) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 12/03/2020. *SANTOSH VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- RAGHUVEER METAL INDUSTRIES LTD., AJM ER. 2. IZR;FKHZ@ THE RESPONDENT- DCIT, CENTRAL CIRCLE, ALWAR. 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR. 6. XKMZ QKBZY@ GUARD FILE { ITA NO. 555 & 556/JP/2016} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR