Customs, Excise and Gold Tribunal - Mumbai
Avadh Transport Service vs Commissioner Of Customs, Mumbai on 28 January, 2002
Equivalent citations: 2002(143)ELT179(TRI-MUMBAI)
ORDER J.H. Joglekar, Member (T)
1. This batch of applications covers a number of manufacturers. The facts of the case and the allegations made in the show cause notices as well as the findings are common. On hearing both the sides, we find that the appeals themselves could be taken up for disposal together in this single order. Both the sides agreeing, this was done after granting waiver of pre-deposit of the duty and penalty indicated against each applicant:
2. Name of the party Duty Penalty (in Rs.) M/s. Avadh Transport A. No. E/944/01-Mum.
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16,00,000 A. No. E/945 3,00,000 A. No. E/946 3,00,000 A. No. E/947 3,00,000 A. No. E/94S 7,50,000 M/s. Gupta Cranes & Storages P. Ltd.
A. No. E/949 16,00,000 A. No. E/950 3,00,000 A. No. E/951 8,00,000 A. No. E/953 7,50,000 A. No. E/1011 3,00,000 A. No. E/1322/01 20,00,000 A. No. E/1323/01 6,00,000 A. No. E/1324/01 2,00,000 A. No. E/1325/01 10,00,000 A. No. E/1326/01 10,00,000 M/s. JBF Inds. Ltd.
A. No. E/986/01 3,95,16,109 3,95,18,109 A. No. E/1015/01 8,22,45,998 8,22,45,998 A. No. E/1016/01 1,16,76,269 1,16,76,269 A. No. E/1017/01 1,77,58,730 1,77,58,730 A. No. E/1018/01 3,07,17,213 3,07,17,213 Shri Bhagirath Arya A. No. E/1013/01 40,00,000 A. No. E/1049/01 80,00,000 A. No. E/1058/01 15,00,000 A. No. E/1052/01 15,00,000 A. No. E/1060/01 30,00,000 Shri Bhajrang Joshi A. No. E/1014/01 20,00,000 A. No. E/1050/01 40,00,000 A. No. 1059/01 7,50,000 A. No. 1053/01 7,50,000 A.No.E/1061/01 15,00,000 M/s. Sainath Roadways A. No. E/1924 80,000 E/1064/01 8,00,000 A. No. E/1067/01 16,00,000 A. No. E/1065/01 3,00,000 A. No. E/1066/01 3,00,000 A. No. E/1063/01 7,50,000 A. No. E/1814/01 1,50,000 M/s. Blue Blends (I) Ltd.
Total duty 23,83,48,778 23,83,48,778 Shri Suraj Dugar Total penalty 2,40,00,000 Amply Polyyaran A. No. E/1763 1242,67,53 (sic) 1,67,53,242 A. No. E/1767 4,44,88,486 4,44,88,486 Shri C.T. Jain A. No. E/1764 20,00,000 A. No. E/1767 40,00,000 M/s. Lata Polyster Ltd.
37,91,697 37,91,697 Ravindra Kumar H. Agarwal 4,00,000 Sharad Fibres & Yarn Proces-
74,53,278 74,53,278 sors Aditya Dalmia 7,50,000
3. Although, the facts are common, we will take one order as illustrative of the facts. That order is Order-in-Original No. 26/2000 made on 26-12-2000 and later shown to have been made on 27-11-2000 but issued on 27-12-2000.
4. M/s. JBF Industries Ltd. (M/s. JBF) were engaged in the manufacture of twisted yarn/polyester texturised yarn. They were located at Silvassa. The Director General of Anti-Evasion investigated the intelligence of under-valuation and evasion on the part of M/s. JBF. Enquiries revealed that RG 1 registers maintained by M/s. JBF did not show the details such as denierage etc. of the twisted/texturised yarn. It was found that the invoices issued under Rule 52A bore only the names of the buyers and did not contain details such as their address etc. It was found that the goods leaving the factory were taken to ware houses in Bivandi where they were stored. The brokers used to locate the potential buyers and used to introduce them to M/s. JBF. The prices for such yarn were negotiated by the buyers and M/s. JBF and the payments were made by way of third party bearer cheque. These goods were then lifted by the buyers from the ware houses on the basis of the delivery orders given by the Head Office of the M/s. JBF. The local movements were done by transporters. The transporters were found to have in their possession a number of rubber stamps bearing the names of different parties which rubber stamps were impressed on the delivery orders by the transporters on the directions and at the instance of M/s. JBF. Investigations also showed that M/s. JBF had hypothecated the stock of such yarn with a bank and had filed periodical statements with the bank showing much higher value of such stocks. Statements of the persons concerned of manufacturers, transporters, transporting agents, ware house keepers and brokers were recorded. At the end of the investigations, show cause notices were issued alleging suppression. It was alleged that the prices declared to the Bank by M/s. JBF were comparable with those at which another manufacturer in Silvassa engaged in the same activity of twisting/texturising of yarn had sold their goods. The prices declared to the Bank were taken to be the appropriate prices at which the goods should have suffered the burden of duty. On that basis, the differential duty was calculated and the show cause notices were issued seeking recovery of the differential duty so calculated alleging contravention of the various provisions of law and seeking imposition of penalty on the concerned persons. The cases were adjudicated by the Commissioner, Central Excise (Adj.), Mumbai confirming duties and imposing penalties as shown above. The persons aggrieved by the said orders have filed the appeals and the present applications.
5. Shri M. Chandrasekharan, the Sr. Counsel made various arguments on merits but stressed his arguments on the denial of natural justice on the part of the Commissioner while adjudicating the cases. He drew attention to the list of events and also showed us related correspondence. On receipt of the show cause notice M/s. JBF applied for the documents mentioned in Annexure B to the show cause notice but which had not been supplied to M/s. JBF. During the next two months certain documents were received. In July, 2000, a similar request was once again made. Some more documents were received by them in August, 2000. M/s. JBF applied for extension of the date of filing of their reply. Time was granted up to 8-11-2000. A further request was made for extension of time. Time was granted but not to the extent requested. The Commissioner directed M/s. JBF to appear before him on 15-11-2000 vide letter dated 20-10-2000. On further request of M/s. JBF, the personal hearing was re-scheduled to 24-11-2000. The appellants M/s. JBF had in the meanwhile attempted to file a formal reply but had found that certain other documents which were not relied upon in the show cause notice which would assist them in drafting the reply had not been given to them and, therefore, they made a request for the supply thereof. There was no response. M/s. JBF kept on reiterating the request vide their subsequent letters dated 4-12-2000, 22-12-2000 and 1-1-2001. However, on 1-1-2001, M/s. JBF filed an interim reply. On 5-1-2001, the order-in-original dated 26-12-2000 was received by them. On 3-1-2001, the Commissioner (Adj.) issued a corrigendum referring to her order now impugned before us to the effect that the date of order '26-12-2000' should be read as '27-11-2000'. Subsequent to the receipt of the order also M/s. JBF continued to request for supply of documents addressing their letters to DGAE.
6. Shri Chandrasekharan maintained that in the absence of the documents relied upon, the assessee could not make effective defence. This was brought to the notice of the Commissioner repeatedly. In the face of lack of supply of document also the Commissioner passed the impugned orders. Shri Chandrasekharan maintained that the orders suffer from denial of natural justice and deserve to be set aside on that ground alone.
7. Reference was made to the relevant judgments. In the case of Sanghi Textile Processors (P) Ltd. v. CCE [1993 (65) E.L.T. 357 (S.C.)], the Supreme Court was dealing with a situation where a similar grievance was made by the assessee. The Supreme Court accepted that where the documents were voluminous, the department could not reasonably supply copies of each and every document but observed that the department could identify the essential documents and permit the assessees to take copies thereof or to make inspection thereof. We find that this is what the present applicants were seeking to do.
8. In dealing with a situation where the stakes involved were high and the copies of the documents were not supplied, the Tribunal in the case of Sworn Ply-N-Wood v. CCE [2001 (133) E.L.T. 435] observed that it was incumbent on the part of the department to supply copies of all relied documents considered vital for the assessee's defence and that there was no use in supplying part of the documents relied upon and passing the ex-parte orders.
9. The facts in the order covering M/s. Blue Blends (I) Ltd. and other persons are similar and the same arguments made by Shri Chandrasekharan were adopted.
10. Shri V. Sridharan, ld. Counsel appearing for Sharad Fibres & Yarn Processors Ltd., Emptee Poly Yarn, M/s. Lata Polyesters Ltd. and other persons concerned, adopted the arguments made on merits by Shri Chandrasekharan. He further submitted that in the cases represented by him, the buyers were traceable and were traced. He stated that there were ex-factory sales from the factories and the prices were of ex-factory prices and sales were identical. He further submitted that when the ex-factory prices were available, demand could not be raised on the price at which the sales were made by other persons. He also mentioned that the prices of yarn were subject to market fluctuation and therefore the department assuming that the given price is not correct and on this basis raising the demand was also wrong.
11. Shri Sridharan maintained that the impugned order was dated 15-2-2001 and was issued on 18-2-2001. Personal hearing was initially fixed on 7-12-2000 and was later adjourned to 22-1-2001. In the meanwhile, a number of letters were written by M/s. Lata Polyesters Ltd. to the Commissioner. Vide their letter dated 26-2-2001 the assessee's stand on the various allegations made in the show cause notice was communicated to the Commissioner. The communication was termed as an interim reply. This reply was received by the Commissioner's office on 28-2-2001. At that time, the order had not been issued. Shri Sridharan referred to Adjudication Manual, Third Edition issued by Central Board of Excise and Customs for use of the departmental officers. In Paragraph 24 of the said Manual, the officers have been advised that if during the period between the completion of the draft order and its issue, a request for personal hearing was received, then it should be invariably granted. The Counsel submitted that the interim reply, as shown above, had been received by the ld. Commissioner during this interval. However, perusal of paragraphs 22 to 24 of the impugned order shows that no cogent action was taken during this interval. He submitted that apart from the argument of Shri Chandrasekharan adopted by him, on this additional ground also the denial of natural justice is clear. He further submits that the Tribunal in passing the Final Order No. 147-150/92-C had taken cognizance of these instructions in the Adjudication Manual in making the order of remand.
12. The Counsels appearing for transporters and other persons were also heard who adopted the arguments made by Shri Chandrasekharan. The common plea advanced was that the penalties imposed on the transporters and the warehouse keepers were the result of the findings of the ld. Commissioner as to the culpability of the manufacturers. The claim was also made that the transporters and the warehouse keepers were functioning under the normal course of business and could not be charged with knowledge of any alleged conspiracy on the part of the manufacturers.
13. Shri Sarkar, DR arguing on behalf of Revenue highlighted the aspect of valuation. He submitted that the valuation adopted for calculation of differential duty was on the basis of the statements made by the manufacturers themselves which prices were also found to be at par with the prices at which the similar goods were cleared by another manufacturer in the same society. He supports the findings of the Commissioner on other aspects also.
14. We have carefully considered the submissions. The date chart filed by the Counsels in each case shows that at no stage, the complete documents relied upon to substantiate the grounds made in the show cause notice were supplied to the assessees. The Counsel appearing for the appellants M/s. JBF also submitted that the request for supply of documents not relied upon was also not granted. He relied upon the judgment of the Madhya Pradesh High Court in the case reported in [2001 (127) E.L.T. 44 (M.P.)] (Methodex Systems Ltd. v. UOI) as to the importance of such documents. Where a show cause notice puts a burden on an assessee, it is necessary that the assessees are given a clear picture and also the chance to rebut the various allegations made in the show cause notice. In order to do this, he must have in his possession all the documents which were relied upon by the department and also those which are not relied upon but which would assist him. He should also, where the documents are voluminous have sufficient opportunity to submit his reply and to present it to the adjudicator. Ideally, all the documents should accompany the show cause notice but where it is not done, the adjudicating authority must make them available to the assessees in time and also give them sufficient opportunity to state their case. From the documents placed before us as also from the arguments made, it is very clear that this was not done.
15. In the case of Blue Blends India Ltd. and others, we find one more instance of such denial. In terms of letter dated 7-12-2001, the ld. Commissioner had scheduled the hearing on 29-12-2001, The impugned order, however, was passed on this very date.
16. In the case of M/s. JBF, personal hearing was rescheduled on 24-11-2001 and the impugned order was made on 27-11-2001 as per the corrigendum issued.
17. We thus find that in dealing with the various issues raised in the various show cause notices and in passing the adjudication orders now impugned before us, the ld. Commissioner had not given sufficient opportunity to the various appellants to state their case before her. Her orders, therefore, suffer from denial of natural justice and do not sustain. We set aside the same.
18. The appeals are allowed. The proceedings are remanded back to the appropriate jurisdictional authority for adjudication de novo. Since the revenue involved is large and since the number of assesseess and other persons are also large, we deem it proper to prescribe a time frame for the de novo proceedings. The appropriate adjudicating authority shall within two months from the receipt of this order shall make available documents as asked for by each noticee. The noticees shall file complete and proper replies to the various allegations within two months after the receipt of the documents by them. The appropriate adjudicating authority shall, thereafter, direct them to appear before him giving sufficient time for them to appear and then pass appropriate orders. Both sides agree to comply with these directions.
19. The appeals are allowed by wav of remand.