Full Judgment
2. The relevant facts of the case in brief are that the appellant company are engaged in the manufacture of medicines falling under heading No. 30.03 of the Schedule to the Central Excise Tariff Act, 1985 and availing facility of modvat credit. On 19.5.1998, the Central Excise Officers seized a truck alongwith bulk drug. The Driver could not produce the duty paying documents. However, on verification the bulk drug found to be duty paid. The officers had got photocopies of invoices, which did not tally with the respective invoices kept in the invoice book of the appellant. The said photocopies of invoices are known as parallel invoices. The appellant No. 4 Shri Dharmendra Singh, Stores Executive and Authorised Signatory of the appellant company in his statement dated 19.5.98 accepted that the excisable goods were cleared without payment of duty under the cover of the said parallel invoices under the direction of Shri Sandeep Jain. Shri Vinay Kumar Pandey, Store Keeper of the appellant company in his statement dated 19.5.98 stated that the goods were dispatched against these parallel invoices as per direction of Shri Sandeep Jain. He also identified his handwriting on the said invoices. Shri Sandeep Jain, Director of the appellant company in his statement accepted that the parallel invoices were issued by the company on which no duty was discharged. The appellant company immediately on 19.5.98 debited the duty of Rs. 86,472/- on the said parallel invoices.
3. During the course of physical verification, the said officers detected the shortage of inputs involving the duty of Rs. 12,708/- which has also debited by the appellant company on 19.5.98. On follow-up action, the said officers detected medicines manufactured by the appellant company in two other premises of the appellant company apart from their factory premises and detained under proper panchnama dated 21.5.98. Shri Chander Mohan Khurana, Director of the appellant company in his statement dated 21.5.98 and 26.5.98 accepted that the detained goods were purchased from the sale depot of the appellant company. He also submitted 14 sale bills issued by the appellant company and on verification it was found that part quantity of the detained goods were duty paid and the same were released and duty was demanded on balance quantity. The adjudicating authority confirmed demand of duty of Rs. 89,314/- alongwith interest and imposed penalty of equal amount on the appellant company and disallowed modvat credit of Rs. 12,708/- and confiscated the seized goods imposed redemption fine of Rs. 5,000/-. Personal penalty was imposed of Rs. 5,000/- each on the other appellants. The Commissioner (appeals) upheld the adjudicating order.
4. The learned Advocate on behalf of the appellants submits that demand of duty on the basis of parallel invoice is not sustainable as it has no evidential value. He submits that there is no evidence of clandestine removal of the goods. The Central Excise Officers recorded the statements of the appellant under duress, which were retracted by the appellants and therefore such statements cannot be relied upon. He submits that Shri Sandeep Jain, Director of the appellant company by his letter dated 19.6.98 made a complaint to the Chairman of the Central Board of Excise and Customs that the statements were obtained under duress. Shri D.C. Jain also made a complaint to the Chairman of the Board about the harassment of the officers. At this regard, he relied upon the decision of the Tribunal in the case of Krishnanda S.Bhat v. Commissioner of Customs, Mumbni reported in 2002 (148) ELT 492 (Tri.Mumbai) which was upheld by the Hon'ble Supreme Court. He also submits that the Commissioner (Appeals) set-aside the adjudication order on the similar issue for the demand of duty of different period vide Order-in-Appeal No. 32 to 35 (MPM)CE/JPR-I/2006 dated 20.1.2006.
He submits there is series of decisions of the Tribunal and the other Courts that clandestine removal cannot be established on the basis of photocopy of invoices. It is his submission that the department failed to produce the original copy of the invoice.
5. The learned authorized representative (DR) reiterated the findings of the Commissioner (Appeals). He submits that in this case the Directors, the Authorised Signatory, and the Store Keeper of the company accepted the removal of the goods on the basis of parallel invoice. They have also debited the duty on the spot. No refund claim was filed by the appellant. Therefore, the demand of duty and imposition of penalty are absolutely correct. He relied upon the decision of the Hon'ble Supreme Court in the case of Gulam Hussain Shaikh Chougule v. S. Reynolds, Supdt. of Cus. Marmgoa , wherein it has been held that confessional statements under Section 108 under Customs Act, 1962 are not required to follow safeguards provided under Section 164 of the Code of Criminal Procedure, 1973.
6. After hearing both the sides and on perusal of the records, it is revealed from the impugned order that the appellants have taken a stand that the informer to the department had been a disgruntled, employee of the appellant company who might have fabricated some invoices by photocopying means to persuade the officer of the department to make a case against the company. In my view, such stand cannot be accepted for the reason that the Director of appellant company as well as the authorized signatory and the Store Keeper accepted the clearance of the goods on the basis of the parallel invoices in their statements. It is pertinent to note that the appellant company paid the duty on the said parallel invoices. At any event, the appellant company had not filed any refund claim in respect of such payment of duty. It is noted that the Director, Store Keeper and Authorised Signatory in their statements separately accepted the existence of the parallel invoice. There is no evidence on record that the statements were recorded under pressure and duress. As such, I agree with the findings of the Commissioner (Appeals) that the retraction of the statement after 20 to 30 days or so has no effect on the legality of the case proceedings. The contention of the learned Advocate that the Commissioner (Appeals) set-aside demand of duty on same issue for the subsequent period by order-in-appeal dated 20.01.2006. The relevant portion of the said order-in-appeal is reproduced below: As regards the first ground, I find that photo copies of parallel invoices were supplied by the casual informer. No originals or duplicates were supplied by the informer nor any original or duplicate of the purported photocopies of the invoices were found in the factory premises or in the residential premises or office at Delhi. There is no admission in any of the statements recorded from the Directors/employees of the company that such parallel/fake invoices were issued by the Appellants in the light of these admitted facts I hold that; Photocopies of invoices can not be relied upon for the purposes of establishing any clandestine removal of goods unless the originals are produced.
7. The present ease is related to the period of dispute of 1998. It is evident from the record that the Directors of the appellant company, the Authorised Signatory and the Store Keeper accepted the removal of the goods on the basis of the parallel invoice and paid the duty. The parallel invoices as referred in Order-in-Appeal dated 20.1.2006 is detected by the Central Excise officers in their visit on 16th March 2000, as such, the facts of the case of the said Order-in-Appeal are not applicable in the present case. I find force in the submission of the learned authorized representative (DR) that the statement recorded by the Central Excise officer under Section 108 of the Customs Act, is admissible evidence as held by the Hon'ble Supreme Court. The demand of duty and imposition of penalty on the basis of parallel invoices are justified.
8. As regards the demand of duty on seized goods from the other premises, its seen from record that the appellant failed to produce any evidence of payment of duty. It is contended by the appellants that Batch no. of the tablets was wrongly mentioned in panchnama. But, there is no dispute that panchnama was prepared in presence of the two witnesses and also one of the Directors of the appellant company who signed the panchnama. Therefore, such contentions of the appellant can not be acceptable at this stage. Regarding the shortage of inputs, the appellant reversed cenvat credit voluntarily and duly admitted in their statement. I agree with the detail finding of Commissioner (Appeals).
9. So, the impugned order against the appellant company are upheld.However, I do not find any reason of imposition of penalty upon Shri Dharmendra Singh, Store Keeper as he is an employee of the company and acted under the instructions of Shri Sandeep Jain Appellant No. 2. As such, penalty imposed on Shri Dharmendra Singh is set-aside. Further, I do not find any material on record to impose penalty upon Shri D.C.Jain, Managing Director and Shri Chandra Mohan Khurana, Director of the appellant company and the same are also set-aside. But, there is clear admission on the part of Shri Sandeep Jain, Director and the penalty imposed upon him is upheld 10. In view of the above, the appeals of the appellant company and Shri Sandeep Jain appellant Nos. 1 and 2 are rejected and the appeals of Shri D.C. Jain, Dharmandra Singh and Chander Mohan Khurana appellant Nos. 3, 4 and 5 are allowed with consequential relief.