Customs, Excise and Gold Tribunal - Mumbai
A. Arti Leathers Pvt. Ltd. And Ors. vs Commissioner Of Central Excise And ... on 8 November, 2000
Equivalent citations: 2001(73)ECC138, 2001(136)ELT1255(TRI-MUMBAI)
ORDER Gowri Shankar, Member (T)
1. These three appeals are against the order of the Collector confirming a demand for duty for Rs. 30,62,251 issued to M/s. Aarti Leathers Pvt. Ltd., the manufacturer; imposing a penalty on it of Rs. 20.00 lacs under Rule 173Q(1) of the Act, and penalties under Rule 209A of the Rules of Rs. 5.00 lacs and Rs. 2.00 lacs respectively on K.M. Ved and A.K. Chakrabarty, production manager and director respectively. The Collector has also ordered confiscation of the plant and machinery of the manufacturer, permitting it to be redeemed on payment of fine of Rs. 50,000. The common notice issued to the appellants arose out of a search by the officers of the factory. The search resulted in recovery of some documents. The statements of Kamlesh K. Trivedi, the packing clerk of the manufacturer, A.S. Chakrabarty, managing director, and K.M. Ved, production manager were recorded on that day and the next day. Trivedi acknowledged the seizure of a file bearing word "Kamal" from the table. He agreed that the entries in the papers in the file relating to despatch of cotton fabrics manufactured by the appellants which contain the words "W/O" indicated goods cleared without payment of duty. Ved, the production manager, stated that he looked after the entire production of the company and maintenance of excise records and that he checked the records maintained by the clerk staff. He agreed that he had made the entries in the diary of 1987 recovered from the factory. He explained that entries in the diary containing the words "w/o" and "without" referred to goods cleared without payment of duty. He said the same with regard to despatch of goods under three lorry receipts. Chakrabarty, in his statement recorded on 2.8.1987 said that he confirmed the correctness of the depositions made by Ved and Trivedi. It is contended that these persons, retracted the statements shortly after they were made, alleging that they were recorded "under pressure". The Collector however records that statements were again recorded on Kamal N. Trivedi on 18.11.1987 and Chakrabarty on 22.12.1987. In these two statements, each of them once again accepted that the entries containing the words "W/O" or "without" related to goods cleared without payment of duty. Chakrabarty has, in his statement of 22.12.1987, confirmed that whatever statements given by Trivedi were correct. In the course of the enquiry by the officers, statements of clerks of the transport company were also recorded. It is as a consequence of these enquiries that the notice came to be issued, resulting in the order impugned in the appeals.
2. When the appeal first came up for hearing on 18.9.1997, it was adjourned. It was again adjourned on 23.10.1997 on the ground that Mr. A.M. Rawal, Advocate for the appellants was not prepared and that the appellant company has been taken over by the Gujarat State Financial Corporation. The matter was again adjourned to 11.11.1997. On 16.5.2000, Mr. Rawal claimed that the matter was pending before the Gujarat High Court in pursuance of a winding up petition filed by Chakrabarty against the company for appointment of an official liquidator. The matter was again adjourned at the request of the appellant to 27.6.2000. When it came up on 10.8.2000, the advocate for the appellants produced an order dated 10.7.2000 of a learned single judge of the Gujarat High Court in support of his contention that order has been passed for winding up of the company. On reading of that order, we are of the view that that was not the order for winding up. According to us, the order only said that M/s. Ravel Pvt. Ltd. is entitled to the "unit of the petitioner" which has been taken over by the Gujarat State Finance Corporation. Although the "unit" does not mention, it is possible that it relates to M/s. Arti Leather, the appellant. In any event, this order does not say anything that winding up has been ordered of the company or any official liquidator has been appointed. When this was pointed out to the Advocate for the appellants, he requested for some time. In view of the pendency of the matter, and in the absence of any reasons advanced in support of his request for adjourning to September, 2000, we adjourned the matter today.
3. None of the appellants is present and unrepresented. We have heard the departmental representative and read the relevant papers and proceed to decide the appeals.
4. The notice to show cause contains the details of the duty recovered in four Annexures. Annexure A relates to duty demand on the basis of three lorry receipts showing despatch of the goods, for which there are no entries found in the statutory records maintained by the company. Annexure B seeks to demand duty on the basis of the diary and other documents seized from the company to which we have already alluded. Annexures C and D proposed to demand duty consequent upon the demands in Annexures A and B. This demand arises on the view that, by including in the assessable value of the goods cleared by the assessee, the goods on which duty is demanded in Annexures A and B, it is no longer entitled to the benefit of Notification 273/86, since the value of clearances in the preceding year has exceeded the limit of Rs. 15.00 lakhs.
5. The contention of the appellant with regard to this is that the statement of the persons concerned having been retracted cannot be relied upon. The Collector in his order has not dealt with this point at all. The evidence in support of the retractions is contained in Annexure D to the appeal of the assessee. These are letters stated to have been sent by Chakrabarty, and and Trivedi on 23.12.1987,24.12.1987 and 20.11.1987. With the letters of Chakrabarty and Ved, copy each of receipt for the registered letter from the postal department enclosed. This receipt does not indicate the senders of these by Chakrabarty and Trivedi. There is no evidence produced to show that these letters were sent by registered post by Chakrabarty and Trivedi or received by the Deputy Collector to whom they are addressed. There is no postal receipt attached to the letter sent by Trivedi of 20.11.1987.
6. In these circumstances, it is difficult to accept that these letters constitute retractions of the statements. Further, these letters, in any event, relate to the latter statements recorded in December and November. They are silent about the statements recorded in August 1987. None of them retracted from these statements given on these dates. These statements therefore must be considered continue to stand. As we have said, it is difficult to accept that the latest statements have in fact been retracted. Apart from the deficiency in the evidence that we have pointed out, no particular reason is given in the retraction except to say that the statements were recorded "under pressure". The nature of the "pressure" is not given. They by itself, to our mind, does not constitute any element of coercion or threat vitiating these statements.
7. It is next contended that there has been numerous visits by the officers earlier to the factory and on those occasions no discrepancies or shortcomings in the goods or stock were found. This is no answer. It is further contended that the file recovered from Trivedi's table must have been planted either by the officers or by the staff in collusion with the officers. The fact that earlier visits by the officers did not find any discrepancy does not by itself is of any significance. We are concerned with specific reasons and admissions. The contention that the officers planted the file is also unsupported by evidence. The correctness or legality of taking over of the documents from them is not questioned. No motive is alleged as to why the officers should wish to frame the assessee by planting documents. This explanation is therefore unacceptable. It is also to be noted that this point has not been taken up at any stage earlier. If a file were planted, this would the first thing that the affected person would protest about. For these reasons, we are unable to accept this contention.
8. The contention that the Collector has not passed a speaking order is entirely unacceptable. The Collector had devoted substantial amount of reasoning and gone into details in coming to his conclusion.
9. We will now turn to each of the annexures. It is contended that the demand for duty in Annexure A cannot be confirmed for the following reasons. There was no seizure of the premises of the customers. The employees or partners of the transport agency had, in reply to cross examination, said that freight is recovered from the consignee and therefore there was no claim for short delivery from the consignee to whom the goods were consigned. Annexure B demands duty on goods covered by three lorry receipts. Concerned persons of the transport company had initially accepted before the investigating officials despatch of the goods as mentioned in the lorry receipts. If subsequently, none of them has denied the transport, the persons concerned with the freight recovered from the consignee on the basis that there was no claim of short delivery by the consignee we do not see how this is relevant. Apart from the fact that the earlier statements of the transport agency is very much in favour of the department. We are therefore unable to interfere. The contention that lorry receipt No. 7717 dated 4.2.1987 of Single Transport Company was issued to create finance and that no goods were actually sent is impossible to accept. The contention that the transporter colluded with the appellant for their making false statement is not acceptable. No motive is shown for such collusion. In any event, the employee of the transport company has confirmed carriage of the goods.
10. The contention with regard to Annexure B, apart from the one alleging planting a file that we referred to earlier, is that it is ridiculous to believe that any assessee would resort to writing letters to that "W/O and without" etc. The involuntary nature of the statement is also emphasised, alleging that officers were kept in the office from the morning till mid-night. We have already dealt with this aspect relating to the retraction. Another point made is that statement of R.T. Ruparel, a director, who was not at all concerned, was recorded regarding these words and letters. This shows, according to the appellant, the contrived nature of the statements. It has not been established by evidence that Ruparel was not in a position to know of the activities of the clerk. This defence is therefore, of no significance. We are therefore unable to find material that would justify disagreement with the Collector's finding.
11. It is next contended that the demand for duty in Annexures C and D consequent upon the denial of Notification 273/86 is not maintainable. There have been errors in Annexure B, which, if corrected, would result in clearance remaining within the limits mentioned in the notification. There is however no material in support of this contention in the appeals.
12. Annexure L of the appeal, it is contended, shows details of goods which have been erroneously included, which were not in the relevant file, which shows that the goods have been removed without payment of duty. According to this annexure, whereas the total quantity removed mentioned in the full case is 40690 linear metres and 200 kilograms, the department has demanded duty on 1,61,500 and 487.500 kilograms. It is also contended that the value taken of Rs. 30 linear metres is excessive as it includes excise duty as well as tax and other features.
13. The same arguments have been advanced before the Collector. He has said that no specific evidence of error has been pointed out with regard to the quantity and only a general statement was made. He has also said that no evidence has been produced to show that the rate of duty of Rs. 30 per linear metre was incorrect. As we have noted, details of entries have been pointed out before us in Annexure. Annexure M of the appeal, there are copies of gate passes, which show the assessable value of the fabrics at less than Rs. 30. In gate pass No. 104 the values are shown as commercial grade III at Rs. 17.75, grade II at Rs. 22 and grade I at Rs. 24 per linear metre. These two lend support to the contention of the appeal. We are of the view that this aspect therefore should be gone into in detail by the Commissioner.
14. Subsequent to issue of the notice, a corrigendum (Annexure E) was issued. This corrigendum proposed recovery of an amount of duty contained in Annexure E. This duty was worked out by taking into account by working out the pro rata fuel and power charges per metric tonne of production based upon the figures contained in the balance-sheet of the assessee for the years 1987-88 and 1988-89. By applying these figures to the clearance of the year 1986-87, it was contended that what was cleared in 1986-87 ought to be not 666 metric tonne as declared in the balance-sheet but 871 metric tonne. The Collector found that no arguments have been put forward against this allegation, and therefore confirmed it.
15. It is contended that the appellant did not receive this corrigendum. Even if it was, we would be unable to uphold the demand for duty on this basis. It is not possible for us accept a demand based only upon the cost involved in fuel and power charges incurred. It is very possible that the fuel and power charges might have increased in 1988-89 compared to the previous year. There may have been greater amounts of fuel and power required in regard to other reasons such as stoppages and break down By this method, the Collector has in effect applied the provisions of Rule 173E; if that rule is to be applied, normally by applying norms mentioned in that rule. That has not been done. The method by the Collector is entirely arbitrary and cannot be accepted. The demand for duty contained in Annexure E will have to be set aside.
16. We will now turn to the appeals of Chakrabarty and Ved. The common contention in these appeals against the penalties is that the documents relied upon by the Collector are not acceptable as evidence and penalty are in any case excessive. The clear admission by both these persons with regard to the evasion is significant. We have already earlier each of them are liable to penalty. The assessee would also be liable to penalty for the reasons that we have mentioned earlier and for the same reasons confiscation would have to be confirmed.
17. We are however, not in a position to say the amount of duty payable, as it has to be quantified afresh for the reasons that we have mentioned above. The liability to penalty on the assessee and its employees would have to be fixed after determining the quantity of duty and taking into account the value of goods. We are therefore of the view that the penalties are set aside, as also the find (sic) [fine] for redeeming the plant and machinery confiscated.
18. Accordingly, we allow the appeals and set aside the impugned order. The Commissioner shall after giving the assessee a reasonable opportunity of being heard in the matter to produce evidence in support of the contentions, and hearing them with regard to the matter that we have discussed above, and pass orders determining the amount of duty proposed to be confirmed at Annexures B and D and consequent liability, if any, as a result of denying the exemption notification. He shall thereupon determine the penalty imposable on the assessee and redemption fine of plant and machinery and penalties on the other two appellants and pass orders according to law.