Custom, Excise & Service Tax Tribunal
Narendra Products vs C.C.E., Kanpur on 8 August, 2014
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, WEST BLOCK NO.II, R.K. PURAM, NEW DELHI-110066
DIVISION BENCH
E/678/1998-EX(DB), E/679/1998-EX(DB)
(Arising out of OIA No. 30-CE/KNP/10/98 dated 18.02.1998 passed by Commissioner of Central Excise (Appeals) Allahabad)
Dated of Hearing: 31.01.2014
Date of pronouncement: 08/08/2014
Narendra Products Appellants
Vs.
C.C.E., Kanpur Respondent
Appearance:
Present for the Appellant: Ms. Surabhi Sinha, Advocate (Amicus Curiae) Present for the Respondent: Shri M.S. Negi, DR Coram: Honble Shri D.N. Panda, Judicial, Member Honble Mr. Manmohan Singh, Technical Member FINAL ORDER NO. 53155-53156/2014 PER: MANMOHAN SINGH When the matter was called no one appeared for the appellant M/s Narendra Products nor there was any request for adjournment. On going through the records, we find that on earlier occasion on dated 04.11.2013 and 29.01.2014 too, no one had appeared for the appellants. In the circumstances, we deem it fit to proceed to decide the matter with the help of the learned DR on the basis of evidence and appellants contentions available on record. Ms. Surabhi Sinha, Advocate was appointed as amicus curiae to help the bench to decide the case.
2. We note that the matter was earlier decided by the Tribunal vide Final Order No A /199 200/ NB(DB) dated 16.03.2000. Honble Bench after noticing the evidence of alleged clandestine removal of pan masla/gutka by the appellants, remanded the matter back to the Commissioner for de-novo adjudication on the grounds that the earlier adjudication by the Additional Commissioner vide his Order in Original No.23/ADDL.COMMN./MP/97 dated 30.09.1997 of the instant case was without jurisdiction as the SCN dated 21.3.1995 relevant to the case was issued by the Commissioner and consequently the Additional Commissioners order was without jurisdiction. Bench relied upon the decision of Allahabad High Court in the case of Jawahar vs. State reported as AIR 1968 Allahabad 87 in the matter. Revenue preferred appeal against the Tribunals above noted order before the Allahabad High Court vide CE Reference Application no. 112 of 2000 in appeal no E/678 679/98-NB(D). Honble High Court decided the matter vide Order dated 9.8.2011 holding that the issue of jurisdiction was no more res-integra in terms of Supreme Court decision in the case of Pahwa Chemicals Pvt Ltd vs. CCE New Delhi ( AIR 2005 SC 1532) as well decision of Allahabad High Court in the case of CCE vs. Su Beverages (decision dated 13.12.08 in CE reference no. 2 of 2003) and therefore remanded the matter back to the Tribunal for decision on merits observing that the Tribunal had not given findings on the merits of the case. The present proceedings are in pursuance to the direction of order dated 9.8.2011 of Honble High Court.
3. M/s Narendra Products has filed appeal against the order of Commissioner (Appeals) 30-CE/KNP/10/98 dated 18.02.1998 before the Tribunal.
4. Honble Tribunal in its Final Order No.A/199-200/2000-NB(DB) dated 16/3/2000 referred the issue of Jurisdiction and remanded the case to the Commissioner concerned to examine all the issues afresh including limitation and pass appropriate orders in accordance with law after giving the appellants an opportunity of being heard in person.
5. The facts of the case in brief are that acting on an intelligence, the Central Excise Officers visited the premises of M/s Narendra products, Nai Ki Mandi, Agra on 17.12.92 and found that the appellants were engaged in the manufacture of Shankar Gutka. M/s Narendra Products, Nai Ki Mandi was holding a central excise licence for the manufacture of pan masala/gutka. Shri Narendra Kumar, proprietor of M/s Narendra Products, Nai Ki Mandi in his statement recorded on 3.1.93 stated that in the beginning, they were manufacturing Lehar brand tobacco mix pan masala/gutka; that since Lehar tobacco mix pan masala did not succeed in the market, they stopped manufacturing it and started manufacturing Shankar Gutka. Shri Kamal Kumar, authorized signatory of M/s Narender Products in his statement stated that his younger brother, Shri Narendra Kumar was the proprietor of M/s Narendra Products. He stated that the statutory records were with their accountant and, therefore he would produce them later. Records were brought from the accountant and delivered to the Central Excise Officers on 17.12.92. On physical verification of the stock in the premises of Nai Ki Mandi on 17.12.92, the opening balance on 3.12.92 according to the RG-1 register was 64.250 kgs. However, on the date of the visit only 13.125 kgs of Shankar gutka was found. Shri Kamal Kumar stated that it was the days production of 17.12.92. RG-1 register was written only upto 2.12.92. The last GP-1 No.10 dated 1.12.92 was shown as last gate pass issued. Shri Kamal admitted that 64.250 kgs. of Shankar gutka recorded in RG-1 register as the opening balance on 3.12.92 have already been cleared by the unit without issuing any Central Excise gate pass and without paying central excise duty of Rs.6,048.15.
6. Scrutiny of the PLA revealed that it contained debit entries in respect of Central excise duty paid only upto GP-1 No.5 dated 10.10.92; that there was no debit entry in respect of Shankar gutka cleared from Nai Ki Mandi under GP-1 No. 6 dated 1.11.92 to GP-1 No. 10 dated 1.12.92; that though an entry number was given in GP-1 yet no corresponding debit entry was actually made in the PLA in respect of each gate passes, they had made a consolidated debit entry of the amount of duty involved in respect of GP-1 No.6 dated 1.11.92 to GP-1 dated 25.11.92. However, in respect of GP-1 No.10 dated 1.12.92, no debit entry whatsoever was made in the PLA. Accordingly it was, therefore alleged in the SCN that M/s Narendra products, Nai Ki Mandi under GP-1 No.6 dated 1.1.92 37.5 kgs of Shankar Gutka in the form of 30,000 pouches and another 12.5 kgs of Shankar gutka contained in 10,000 pouches were cleared without payment of duty. Intelligence also showed that there was another unit of Shri Narendra Kumar at New Adarsh Nagar, Agra. This unit was found engaged in the manufacture and clearance of Shankar gutka with the help 3 pouch making machines without obtaining central excise registration. 606 packets of Shankar gutka were found which were seized and the case has been adjudicated by the Asst. Commissioner. A team of the officers also visited the residential premises of Shri Ram Prakash Gupta and one gunny bag containing 300 packets of Shankar gutka were recovered. There were seizures and the case has been adjudicated by the Asstt. Commissioner. The statements of Shri Dinesh, driver, Smt. Angoori Verma, wife of Devki Nandan and Smt. Harvati wife of Shri Hari Singh were recorded. Shri Dinesh Kumar in his Statement stated that from 14.12.92, he had transported a total quantity of 225 kgs of loose unpacked zarda mix pan masala from Nai Ki Mandi unit to New Adarsh Nagar, Agra unit; that apart from him, Shri Jitendra Keshwani, younger brother of Shri Narendra Kumar, Shri Kamal Kumar, Smt. Angoori Verma and Smt. Harvati were present in Adarsh Nagar unit at the time of the visit of the officers on 17.12.92. Shri Kamal Kumar, Smt. Angoori Verma and Smt. Harwati were engaged in the packing of Gutkha at the time of visit of the officers. It was also noticed that out of 3 pouch making machine at New Adarsh Nagar unit, only one machine was working. 3 pouch making machines had, in their hoppers, a total quantity of 8.500 kgs of loose Pan Masala. In his statement, Shri Dinesh Kumar stated that apart from 7.5 kgs of loose zarda pan masala some other items were there; that New Adarsh Nagar unit was working daily from 14.12.92. Shri Dinesh Kumar stated that at the time of the visit of the officers, 83.5 kgs of zarda pan masla was lying at New Adarsh Nagar Unit in loose condition. It was, therefore on the basis of above facts alleged that a total 141.500 kgs of loose zarda pan masala was consumed upto 17.12.92 for the packing and manufacturing of Shankar gutka at New Adarsh Nagar Unit. SCN was accordingly issued by the Collector asking the appellants to deposit the duty. Penalty was also imposed on two units.
7. We also note that the facts have been duly summarized by the Commissioner (Appeals) on page 3 of his Order-In-Appeal and demand raised are as follows:-
PERIOD OF DETAILS OF SHANKER GUTKA ALLEGEDLY CLEARED WITHOUT PAYMENT OF DUTY Sl.No. Name of the Unit Demand Qty. (kgs.) Value (Rs.) Total Duty (Rs.) Remarks
1. Narendra Prod. Nail Ki Mandi, Agra. (appellant No. 1 01.7.92 to 04.11.92 1031.25 211035.00 97076.10 Calculation as per statement dt. 18.12.92 of Shri Kamal Kumar.
2.
-do-
05.11.92 to 18.12.92 5397.803 1104606.40 508118.95 Calculations of empty containers of Tobacco on 18.12.92.
3.
-do-
19.12.92 to 02.01.93 4329.625 886014.46 407566.65 Calculations on the basis of the statement dt. 03.01.93 of Shri Narendra Kumar.
4.
-do-
Detected on 17.12.92 & 03.01.93 134.750 27575.24 12684.60 Shortage of the RG-I balance found during the physical verification.
5.
-do-
01.11.92 to 01.12.92 50.00 10206.80 4695.12 Duty not paid detected during the scrutiny of GP.1 and PLA.
TOTAL
-do-
01.07.92 to 02.01.93 10943.428 2239437.90 1030141.42
6. Narendra Prod. New Adarsh Nagar, Agra. (Appellant No. 2) 14.12.92 to 17.12.92 103.625 33160.00 15253.60 By packing of loose Pan Masala received from the Nai Ki Mandi Unit.
7.
-do-
Before 14.12.92 150.00 48000.00 22080.00 Shankar Gutkha sold to Shri Ram Prakash Gupta.
TOTAL
-do-
Upto 17.12.92 253.625 81160.00 37333.60
8. It was noted by the Commissioner(Appeals) that out of the above seven demands, the appellants were only contesting demands mentioned at Sl. Nos. 2, 3 and 6 of the table above for Rs.5,08,118.95/-, Rs.4,07,566.65/- and Rs.15,253.60/- only and the rest of the demands at Sl.No. 1,4,5 and 7 have been conceded by them.
9. We have gone through the Grounds of Appeal and find that the present appeal too is for demands at Sl. Nos. 2, 3 and 6 of the above table only. Therefore duty demands as mentioned in Sl. Nos 1, 4, 5 and 7 for Rs.97,076/-; Rs.12,648/-, Rs.4,695/- and Rs.22,080/- are not being agitated before Tribunal. Only three demands as above are under contest and those are dealt by this order one by one.
(a) Demand for Rs. 5,08,118.95/- :
10. Appellants submission in the grounds of appeal is that the demand was based on recovery of certain empty containers of tobacco on 18.12.92 and 3.1.93; that there were 1313 empty containers and total quantity worked out was 262.600 kg of tobacco; that the seizure of unaccounted tobacco from the 2 units of the appellants was 245 kg ( 200 kg from Adarsh Nagar premises and 45 kg from Nai Ki Mandi premises); that duty liability on the balance quantity of 45 kg tobacco works out to be Rs. 21,500/- only. DR submitted that the demand was for the Nai Ki Mandi unit of the appellant and drew our attention to the Commissioner (Appeals) findings and submitted that this was a new ground taken by the appellants; that earlier it was argued by them that the quantity worked out on the basis of empty containers was incorrect as the Revenue had assumed addition of unbranded tobacco in the branded tobacco; that the Commissioner (Appeals) had rebutted the contention on the ground that the same was based on the statement dated 27.12.93 of Sh. Kailash Chand, one of their authorized signatory of the appellant where he had admitted to such mixing of unbranded tobacco with the branded tobacco; that Commissioner (Appeals) had also observed that containers of unbranded tobacco too were recovered from the appellants. DR also pointed out that the demands have not been repeated and for different periods, different demands have been issued as was evident from the Chart referred above, that the unit was in operation since June 1992; that this demand was for the period 5.11.92 to 18.12.92; that for the earlier and later periods, separate demands have been issued which were mentioned in the Chart; he further argued that it was a case of clandestine manufacture and clearance of gutka by the appellants and therefore required confirmation of entire demand for which evidence was there and no concession was to be given for adjustments being sought by the appellants.
11. After considering the grounds of appeal and Revenues arguments, we find that the appellants could not made different stands at different print of time. We note that this is a case of clandestine manufacture and clearance and therefore no adjustments could be considered. We note that the matter pertains to two raids and for two different manufacturing premises of which only one was registered with the Revenue for payment of Excise duty. Intent to evade duty has clearly been manifested. Further the appellants never produced relevant purchase / sale records clearly indicating that most of the activities were undertaken with fraudulent intent to evade duty. Appellants have failed to show that intent to evade was not there. We do not find any ground to interfere and accordingly uphold the demand of Rs.5,08,118.95/- (Rupees five lakhs eight thousand one hundred eighteen and ninety five paisa only).
(b) Demand for Rs.4,07,566.65/- :
12. For this demand of Rs.4,07,566.65/- the contention of the appellant in the grounds of appeal is that the same was based on imaginary calculations on the basis of the statement of Sh. Narendra Kumar dated 3.1.1993 where he had stated that his pouch packing machines were capable of producing 2000 to 2500 per hour; that there was no evidence other than his statement; that there were no statements of any buyers or supplier of raw materials or their production staff; that the capacity to produce in itself would not mean actual production of goods. On the other hand, learned DR submitted that the demand was for the Nai Ki Mandi unit of the appellant and drew our attention to paragraph 9 of the Commissioner (Appeals) order and submitted that the demand was for the period 19.12.92 to 2.1.93 (while the earlier ones were for the period 7.7.92 to 4.11.92 which was not being contested and for 5.11.92 to 18.11.92 for Rs.508118.95/-, as noted above) and was based on the statement of Sh. Narendra Kumar, the proprietor of the appellant company where he admitted that the average production of his factory was 375 kg per day and that out of that production, they used to show production of only 20 kg per day in their records. DR submitted that this was to be read with the shortage of stocks of finished goods found on 3.1.93 and the detection of empty containers of branded tobacco used for the clandestine manufacture and clearance; that if all these evidences were seen in totality, it emerged that the assessee was engaged in clandestine manufacture and clearance of gutka; that the shortage of stocks and presence of empty containers of raw materials were clear evidence supporting the clandestine manufacture and clearance of the impugned goods which had also been admitted by the proprietor himself.
13. After considering the arguments of Revenue and looking to grounds of appeal of appellant and especially noticing that there was no overlapping of the demands, we agree with the DRs contention and hold that the evidence for clandestine manufacture and clearance was there. Further non-registration with central Excise department clearly manifested mens rea and in such circumstances, the inculpatory statement of the proprietor was a reliable evidence for the clandestine removal of the goods read with other evidences available on record. Accordingly we do not find any ground to interfere to the confirmation of demand of Rs.4,07,655.65/- (Rupees four lakhs seven thousand six hundred fifty five and sisty five paisa only).
(C) Demand for Rs.15,253.60/- :
14. We notice that this demand pertained to another unit of the appellant situated in Adarsh Nagar, Agra. The period involved was 14.12.92 to 17.12.92. appellants plea was that the demand was solely based on the statements of Smt. Harbati, Smt. Angoori and Sh. Dinesh; that the cross examination of these persons was denied; that there was no other corroboration to these statements; that, therefore, no demand could be confirmed based on unreliable statements of these persons. On the other hand, Ld DR drew our attention to paragraph 11 of the Commissioner (Appeals) order where he had placed reliance on the statements of these persons and that of Shri Ram Prakash Gupta (from his premises also 1 gunny bag of unaccounted Shankar brand gutka was seized) where he had admitted that he had purchased 8 gunny bags of such unaccounted Shankar gutka without bills / invoices, earlier also. He specifically pointed out the statement of Sh Dinesh Kumar, driver of 3-wheeler no. UTR 8371, who was present in the Adarsh Nagar unit at the time of raid on 17.12.92 where he categorically stated that he had transported 225 kg zarda mix pan masala from the Nai Ki Mandi unit of the appellant to their Adarsh Nagar unit; that duty was determined after adjusting the stocks available physically as is mentioned in paragraph 3 (e) of the Commissioner (Appeals) order; that this demand was to be read along with another demand from the same unit for the period before 14.12.92 for Rs. 22,080/- which was also based on the statement dated 18.12.97 of Sh. Kamal Kumar, the authorized signatory where he admitted clandestine clearance of goods to Shri Ram Prakash Gupta and which demand was not being contested by the appellants.
15. After examining the evidences and the arguments, we find that the demand was primarily based on the inculpatory statements of Dinesh Kumar driver of vehicle UTR 8371 who had brought zarda mixed pan masala to Adarsh Nagar unit from the Nai Ki Mandi unit on 17.12.92 when the place was raided by the officers; in this statement he gave the particulars of his earlier transports to the Adarsh Nagar unit from the Nai Ki Mandi unit for 3 days from 14.12.92 to 17.12.92. There was also the seizure of Shankar brand gutka from the premises of Shri Ram Prakash Gupta and his statement to the effect that earlier also, he had received such goods without invoices. The statements of other persons who were labourers was to the effect that the unit was actually manufacturing the impugned goods. Further for the period prior to 14.12.92 (unit began production on 12/13 December 1992) the duty demand of Rs.22,080/- was not being contested by the appellant. Appellants have failed to adduce any evidence to deserve reconsideration. Therefore, considering all the evidence we hold that the duty confirmation for Rs.15,253.60/- for the period 14.12.90 to 17.12.92 is justified warranting no interference.
16. The legal issue relating to jurisdiction i.e. whether the Additional Commissioner had jurisdiction to decide the case when the SCN was issued by the Commissioner having been resolved by the Honble Allahabad High Court, that is no more in res-integra.
17. Another issue raised by the appellant in its grounds of appeal was that the SCN for the present appeal was barred by limitation as the investigations were common for all the SCNs issued for seizure and the instant SCN was received by them on 21.3.1995 while the investigations were over by 27.12.93 when statement of Sh. Kailash Chander was recorded; that normal period for issue of SCN was 6 months and therefore as all the evidence was before the Revenue, the undue delay in issue of SCN was not justified and the extended period of 5 years was not invokable. Law is well settled that plea of time bar does not apply to fraud done against Revenue as has been held by Apex Court in the case of CC Vs. Candid Enterprises reported as 2001 (130) E.L.T. 404 (S.C.).
18. Also Honble Gujrat High Court in the case of CCE Surat-I vs. Neminath Febrics reported as 2010 (256) E.L.T. 369 (Guj) held that concept of knowledge of department authority is entirely absent. Importing of said concept in Section 11A(i) ibid or the proviso ibid would tantamount to rewriting statutory provision and rendering defined term relevant date nugatory - Once it is found that the ingredients of the proviso are satisfied, all that has to be seen as to what is the relevant date and as to whether the show cause notice has been served within a period of five years therefrom. By no stretch of imagination the concept of knowledge can be read into the provisions. To clarify the matter further, para 11 to para 19 are reproduced.
Para 11.?A plain reading of sub-section (1) of Section 11A of the Act indicates that the provision is applicable in a case where any duty of excise has either not been levied/paid or has been short levied/short paid, or wrongly refunded, regardless of the fact that such non levy etc. is on the basis of any approval, acceptance or assessment relating to the rate of duty or valuation under any of the provisions of the Act or Rules thereunder and at that stage it would be open to the Central Excise Officer, in exercise of his discretion to serve the show cause notice on the person chargeable to such duty within one year from the relevant date.
Para 12.?The Proviso under the said sub-section stipulates that in case of such non levy, etc. of duty which is by reason of fraud, collusion, or any mis-statement or suppression of facts, or contravention of any provisions of the Act or the rules made thereunder, the provisions of sub-section (1) of Section 11A of the Act shall have effect as if the words one year have been substituted by the words five years.
Para 13.?The Explanation which follows stipulates that where service of notice has been stayed by an order of a Court, the period of such stay shall be excluded from computing the aforesaid period of one year or five years, as the case may be.
Para 14.?Thus the scheme that unfolds is that in case of non levy where there is no fraud, collusion, etc., it is open to the Central Excise Officer to issue a show cause notice for recovery of duty of excise which has not been levied, etc. The show cause notice for recovery has to be served within one year from the relevant date. However, where fraud, collusion, etc., stands established the period within which the show cause notice has to be served stands enlarged by substitution of the words one year by the words five years. In other words the show cause notice for recovery of such duty of excise not levied etc., can be served within five years from the relevant date.
Para 15.?To put it differently, the proviso merely provides for a situation whereunder the provisions of sub-section (1) are recast by the legislature itself extending the period within which the show cause notice for recovery of duty of excise not levied etc. gets enlarged. This position becomes clear when one reads the Explanation in the said sub-section which only says that the period stated as to service of notice shall be excluded in computing the aforesaid period of one year or five years as the case may be.
Para 16.?The termini from which the period of one year or five years has to be computed is the relevant date which has been defined in sub-section (3)(ii) of Section 11A of the Act. A plain reading of the said definition shows that the concept of knowledge by the departmental authority is entirely absent. Hence, if one imports such concept in sub-section (1) of Section 11A of the Act or the proviso thereunder it would tantamount to rewriting the statutory provision and no canon of interpretation permits such an exercise by any Court. If it is not open to the superior court to either add or substitute words in a statute such right cannot be available to a statutory Tribunal.
Para 17.?The proviso cannot be read to mean that because there is knowledge the suppression which stands established disappears. Similarly the concept of reasonable period of limitation which is sought to be read into the provision by some of the orders of the Tribunal also cannot be permitted in law when the statute itself has provided for a fixed period of limitation. It is equally well settled that it is not open to the Court while reading a provision to either rewrite the period of limitation or curtail the prescribed period of limitation.
Para 18.?The Proviso comes into play only when suppression etc. is established or stands admitted. It would differ from a case where fraud, etc. are merely alleged and are disputed by an assessee. Hence, by no stretch of imagination the concept of knowledge can be read into the provisions because that would tantamount to rendering the defined term relevant date nugatory and such an interpretation is not permissible.
Para 19.?The language employed in the proviso to sub-section (1) of Section 11A, is, clear and unambiguous and makes it abundantly clear that moment there is non-levy or short levy etc. of central excise duty with intention to evade payment of duty for any of the reasons specified thereunder, the proviso would come into operation and the period of limitation would stand extended from one year to five years. This is the only requirement of the provision. Once it is found that the ingredients of the proviso are satisfied, all that has to be seen as to what is the relevant date and as to whether the show cause notice has been served within a period of five years therefrom.
19. Appellant contention that the extended period was not invokable as no case of clandestine removal was made has no force. As noted above, this is a case of clandestine manufacturing and clearance where gutka was being cleared without bills/ invoices and one unit of the appellants in the same name and style was not even registered with the Central Excise department. Mens rea was clearly manifested indicating intent to evade and to defraud governmental revenues.
20. In light of the above findings we order that all the demands of Rs.5,08,118.95/-,Rs.4,07,566.65/- and Rs.15,253.60/-are recoverable from the appellants along with interest. And hold accordingly.
21. Regarding imposition of penalty, from above facts, discussions and investigations, it has clearly come up that M/s Narendra products have indulged in clandestine manufacture and clearance of Gutka. There were having one declared unit and they have been running a additional unit in the same name and style and that too without registration with Central Excise department. Clandestine production and clearance from unregistered unit clearly proved their intentions to defraud government revenue. Once fraud is committed, it vitiates every thing. Above discussions have clearly brought out facts relating to clandestine manufacture and clearance. In view of above, extended period was also rightly invoked. Accordingly, this is fit case for imposition of penalty under Section 11AC. That is ordered accordingly.
22. In view of above, we do not find any force in the contentions of the appellants and no interference is warranted. Accordingly all the three appeals are dismissed.
(Pronounced in the court on 08/08/2014)
(Manmohan Singh) (D.N. Panda)
Technical Member Judicial Member
K. Gupta
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