Customs, Excise and Gold Tribunal - Mumbai
Shakti Chemical Industries vs Collector Of Central Excise on 27 December, 1994
Equivalent citations: 1995ECR329(TRI.-MUMBAI), 1995(76)ELT410(TRI-MUMBAI)
ORDER P.K. Desai, Member (J)
1. Both the appeals, of the same appellants, though are directed against two distinct proceedings, both have virtually a common cause and the final outcome of Appeal E/127/86 has a direct bearing on Appeal No. E/128/86, both the appeals have been argued jointly and are now being disposed of by this common order.
2. Appeal E/127/86 is against Order-in-Appeal No. T-465/BRD-416/85, dated 28-1-1986 of the Collector of Central Excise (Appeals), Bombay, confirming the Order-in-Original No. 14/MP/80, dated 25-11-1980 of the Deputy Collector of Central Excise, Technical Branch, Baroda, where he has imposed penalty of Rs. 7000/- vide Rule 173Q of the Central Excise Rules, 1944, and has also demanded duty at the appropriate rate on 2507.040 kg of Sodium Naphionate with direction to appropriate the amount if already paid, towards the recovery as ordered (The appellants had reportedly paid Rs. 11,432.10 as the duty on 24-1-1980, by making appropriate entry in their PLA).
3. Appeal No. E/128/86 is against the Order-in-Appeal No. T-466/ BRD-417/85, dated 28-1-1986 of the Collector of Central Excise, (Appeals), Bombay confirming the Order-in-Original No. 19/MP/80, dated 31-12-1980 of the Dy. Collector of Central Excise, Technical Branch, Baroda, ordering debit of the sum of Rs. 11,432/- (the amount which the appellants had debited on 24-1-1980 (subject-matter in Appeal E/127/86) but subsequently suo motu recredited) and also imposing penalty of Rs. 1500/- vide Rule 226 of the Rules, and directing appropriating the sum of Rs. 3363/- towards the value of the goods liable to confiscation but not available and the Bond was executed for the same.
4. Factory premises of the appellants were visited by the officials of Central Excise, Vadodara, on 22-1-1980, when, on verification of records, besides RG 1 Register, they came across a Note Book, which appeared to be showing the daily production of sodium nepthionate for the period 29-10-1979 to 19-1-1980, and on verificatoin of the production as shown in the said Note Book and the entries made in RG 1 Register, it appeared that production to the extent of 2507.040 kgs. though shown in the Note Book, did not figure in RG-1 Register. The said quantitiy was valued at Rs. 1,42,901.28 and duty evasion was worked out at Rs. 11,432.10. Statement of the partner of the appellant firm, Mr. Anil Kumar Doshi, was recorded on the same day, who, reportedly accepted the production and non-accountal of that much quantity, and also expressed his willingness to make the payment of duty, and actually paid the same by making debit entry in their PLA on 24-1-1980. However, on the same day, they again made a credit entry in their PLA for the same amount mentioning in the remarks column "this entry is made to set right the illegal debit", without obtaining any permission from any competent authority. In relation to the alleged difference in production figures in the RG 1 Register and the private Note Book, show cause-cum-demand notice dated 28-6-1980 was served on the appellants, whereas in relation to the alleged unauthorised credit entry in their PLA, show cause notice dated 12-9-1980, was issued. The appellants contested both the show cause notices, and pleaded that the alleged admission of their partner Mr. Anil Kumar Doshi was obtained under coercion and was duly retracted, and that consequential debit entry in their PLA was unwarranted, and was unvoluntary and that they were justified in re-crediting the said amount. They also contended that the private note book did not reflect the production figures, and that the alleged discrepancies were the result of misconstruction of the entries contained therein, and that the figures shown were not at variance.
5. In both the matters, the adjudicating authority did not accept the explanation furnished and passed the impugned orders which stood confirmed by the appellate authority.
6. Mr. Willingdon Christian, the Ld. Advocate appearing for the appellants in both the matters has pleaded that, undisputedly, there is no discrepancy noticed between the stock as recorded in the RG 1 and the one lying in the factory premises, and the only ground made out for raising the demand is the note book recovered. He emphasises that the said note book was not secreted somewhere, so as not to be easily accessible to the officers. Pleading that the said book was not the one, which showed the figure of finally produced goods, but it reflected the use of raw material etc. In his submission, the final product, namely sodium napthionate would require 25 to 31 hours cycle, for being treated as fully manufactured, and pleaded that entries in RG 1 were being made only after completion of such a cycle. Producing a compilation of the production figures shown in RG 1 and the figures shown in the Note Book, which the officers have taken as the figures of production, the Ld. Advocate has pleaded that examining the figures in both, from 29-10-1979 to 19-1-1980, on several dates, no production is shown in the private book but RG 1 register shows the production. He points out 8 such entries. He points out three other entries, where quantity in RG 1 is more than the one in the private note book. He pleads that on taking the aggregate total, there would be hardly any difference, so as to warrant a conclusion of any clandestine manufacture and removal. He refers to the decisions of the Tribunal in Raju Textiles v. Collector -1989 (44) E.L.T. 233 (Tribunal) Corona Cosmetics v. Collector, 1991 (55) E.L.T. 118 (Tri.), Ganga Rubber Industries v. Collector, 1989 (39) E.L.T. 650 (Tribunal) Prabhavati Sahakari Soot Girni Ltd. v. Collector, 1990 (48) E.L.T. 522 (Tribunal), Kashmir Vanaspati Pvt.Ltd. v. Collector, 1989 (39) E.L.T. 655 (Tribunal) and Ambica Metal Works v. Collector, 1990 (29) ECR 549 (CEGAT-ERB) to substantiate the plea that such a type of private Note Book cannot be relied upon. Referring to the admission made by the partner Mr. Anil Kumar Doshi at the initial stage, and consequent debit entry made in PLA, the Ld. Advocate for the appellant has pleaded that the statement has been retracted, on the plea that the same was obtained under coercion and given without any verification of the correct position reflected from the record. He submits that besides the fact that documents clearly indicate due recording of production the retracted statement cannot form the basis for any conclusion unless supported by other material evidence which in his submission is not available and refers to the decision of Tribunal in Kalicharan Bansilal v. Collector, 1989 (41) E.L.T. 162 (Tribunal) and the Bombay High Court in State of Maharashtra v. Sayed Mohammed Hashim, 1991 (51) E.L.T. 41 (Bom.). For the other appeal, the Ld. Advocate has pleaded that the debit entry was made under compulsion and hence in good faith entry re-crediting the amount was made. He submits that if the main appeal stands allowed, the action of the appellant does not call for any punitive consequences.
7. Mr. Mishra, the Ld. SDR, has however supported both the orders and has pleaded that the Note Book recovered read as a whole, clearly indicates record of actual production, and that the appellants have not been able to show exact co-relation. He has emphasised on the admission made by the partner, and pleads that such a clear admission coupled with posting of the debit entry in PLA could not have been done by a responsible person, without any verification, particularly when duty debit was done two days after the statement. As regards the second appeal, he submits that the action of the appellants was clearly against the set norms, attracting penal liability.
8. Considering the submissions made and going through the record, the allegations of excess and unaccounted production appear to have been based only on the Note Book found from the premises when the officers visited the same. It may however be mentioned that the actual stock had tallied with the entries in RG 1 register. It also transpires from the record that pursuant to the statement made by partner Anil Kumar Doshi on 22-1-1980, debit entry was made in PLA on 24-1-1980, but the credit entry was also made on the same day, and moreover, a letter dated 24-12-1980 was also written to the Assistant Collector, retracting the admission made by the Partner Anil Kumar, and posting of two entries.
9. As to the reliability of the note book for the purpose of considering the figures shown therein as the figures of production, besides the decisions cited, indicating the extent of authenticity of such note book, even going by the comparative table produced and not challenged, there are instances when the said note book shows nil production or specific quantity, the entries in RG-1 show production or higher quantity. Totalling the production as recorded in RG-1 Register and the quantity alleged to have been manufactured as per the entries in the said note book, during the relevant period, the difference is just a marginal. By this, therefore, it may not be concluded that the note book is an authentic private record of production, so as to raise demand based on the figures indicated therein.
10. Though the partner of the appellants, Anil Kumar Doshi, has in his initial statement, admitted production, and clandestine removal, and has even deposited the duty payable, when the documentary evidence, the authenticity of which is not under dispute, shows otherwise, the same has to be given more credibility than the oral version, spontaneously made. The act of posting debit entry in the PLA could have been a piece of evidence against the appellants as the same was done after two days, but on the same day, the partner has retracted his earlier statement and recredit entry is also made. This indicates that by that time, they seem to have realised falsity in the admission made.
11. With no other evidence available on record, to prove any unrecorded production and clandestine removal, the demand raised and confirmed and the penalty imposed vide Order-in-Original No. 14/MP/80, dated 25-11-1980, cannot be sustained and hence is set aside.
12. With the finding as above, part of the order-in-original No. 19/MP/80, dated 3-12-1980, so far as it relates to demanding reversal of the credit, would be liable to be set aside as the original demand is held as not sustainable. At the same time, however, the contravention of the provision of Rule 226 clearly remains established as the re-credit of the amount debited was done suo motu without any permission from the department. It might have been open to the appellants not to make the debit entry and contest the demand, but once having made the entry, recrediting suo motu was not permissible. The penal liability vide Rule 226 of the Rules, therefore, would survive despite the other points going in favour of the appellants.
13. Penalty imposed is only Rs. 1500/- which is less than the maximum provided for, and there appears no justifiable ground to interfere with the same.
14. Thus, whereas Appeal No. 127/86 is allowed and the order appealed against is set aside, Appeal No. 128/86 is partly allowed and while rest of the order is set aside, the penalty of Rs. 1500/- imposed vide Rule 226 of the Rules is confirmed. Consequential reliefs if any, may be granted.