HINDUSTAN GRANITES Vs. COMMISSIONER OF CUSTOMS, BANGALORE

JUDGEMENT

(1.) THIS is an application for waiver of pre -deposit and stay of recovery of the dues adjudged against M/s. Hindustan Granites, Attibele, Bangalore (HG for short) vide the order impugned in the captioned appeal. HG is an EOU engaged in the manufacture of marble and granite slabs and tiles. The EOU has a branch by name Hindustan Marbles & Granites at No. 5 Lalbagh -Hosur Road, Bangalore, 70 (HMG for short) also engaged in similar activity. Intelligence received by the authorities indicated that HG did not account for the entire goods manufactured and also undervalued accounted clearances to DTA. Accordingly, on 2 -11 -06, searches were conducted by the officers of DGCEI at the premises of HG, HMG and associates; incriminating documents were recovered and statements of concerned persons recorded. After due process of law, the Commissioner demanded Rs. 6,14,49,922/ - under Section 3(1)(ii) read with proviso to Section 11A of the Central Excise Act, 1944 (the Act) being the duty due on the goods cleared between 9/04 and 10/2006 and imposed equal amount of penalty under Section 11AC of the Act and Rule 25 of Central Excise Rules, 2002. Applicable interest was also demanded under Section 11AB of the Act.

(2.) FACTS of the case are that two documents recovered from the premises of HG showed particulars including the vehicle number of carriers used for actual clearances effected by HG in 4/06 and 5/06. No invoices were raised for most of these clearances. For example, the total quantities of granite and marble slabs cleared by HG during the month of April, 2006 were 1203 and 2155 pieces respectively. As per their calculations listed in Annexure C -13, to the show cause notice, at page 3, the total slabs thus cleared was 3358 numbers which worked out to 201480 sq. ft. However, the quantity of the said goods accounted and cleared on payment of duty was only 23283 sq. ft. as per the DTA register and the ledger extracts. From the said page 3 of Anenxure C -13, it was observed that the accounted clearances were a quantity of 23283 sq. ft. where as actual quantity of goods cleared were higher by 178197 sq. ft. The sale value of this quantity was worked out on the said page 3 at Rs. 2,22,74,625/ - at the price rate of Rs. 125/ - per sq. ft. Similarly for 5/06 and 6/06 a qty of 637556 sq. ft. was cleared on payment of duty whereas actual qty. cleared was 704400 sq. ft. It was tentatively found that an amount of Rs. 1,65,45,521/ - was evaded on clandestine clearances by HG during 4/06 to 6/06.

(3.) HMG is a partnership of the proprietor of HG, Shri. M.G. Anand Reddy and his brother Shri. Viswanath Reddy. The finished goods of HG were cleared to its head office and show room of HMG on payment of duty, describing them as Rejected Polished Slabs -Granite. Production records did not show any Rejected Polished Slabs -Granite. These were sold from HMG at much higher prices. Differential amounts were received in cash. It was observed that HG thus short paid an amt. of Rs. 4,49,04,401/ - during 2004 -05, 05 -06 and 06 -07. Thus the total amount payable by HG on the clandestine clearances and clearances effected by adopting undervaluation was Rs. 6,14,49,922/ - (Rupees Six Crore Fourteen Lakh Forty Nine Thousand Nine Hundred and Twenty Two only). Shri Shyam Sundar, General Manager, HG vide his two statements dated 3 -11 -06 and 3 -3 -08 stated that the assessee had paid a total amount of Rs. 35 lakhs voluntarily towards their duty liability for the past period. The gang saw production reports showed the production of finished goods in their factory; that the route cards showed the production of the finished goods from the blocks in their factory; that the freight register indicated the freight amounts paid to the transporters based on the goods received; that the slips and calculation sheets recovered indicated the quantity and rates of goods cleared from HG; that the total clearances effected by them was about 11740 slabs which worked out to about 7,04,400 sq. ft. and that their lapses might be viewed leniently.