Customs, Excise and Gold Tribunal - Bangalore
New Tobacco Ltd. (Lessee Rdb Industries ... vs The Commissioner Of Central Excise And ... on 17 July, 2006
Equivalent citations: 2006(112)ECC203, 2006ECR203(TRI.-BANGALORE), 2007(208)ELT257(TRI-BANG)
ORDER S.L. Peeran, Member (J)
1. These appeals arises from Order-in-Original No. 27/03 dated 23.12.2003 and No. 9/2004 dated 31.3.2004 by which demands have been confirmed against the appellants/manufacturers of Cigarettes under Chapter Heading 24 of CET and for manufacture of shells, slides and gay wrapper falling under Chapter 47 of CET.
2. The Miscellaneous Application pertains to production of additional documents, which were furnished during the adjudication. The Miscellaneous Applications are allowed.
3. The show cause notice is dated 12.12.1996 and the period involved is 1.1.1995 to 30.9.1995 invoking larger period in the matter. The appellant, a Tobacco company is situated in the suburb, Biccavolu is located in Godavari district, Andhra Pradesh away from the town. The factory is controlled by six officers of the Department with two sepoys guards manning the main gate. The allegation of the Department is that on investigation of private registers, it was found that the appellant has manufactured cut tobacco and also procured the same clandestinely and used in the manufacture of the final products cigarettes. The same was clandestinely removed through the transporters. The Revenue has proceeded to record statements of the persons who have supposed to have supplied the Tobacco and the transporters and the private registers. The appellant's grievance is that out of 26 suppliers and transporters, the cross examination of all the persons has not been granted despite request made by them. It is their submission that non-grant of cross examination of these persons, and the officers including sepoys who are controlling the factory, has violated the principles of natural justice. The second ground taken by the appellant is that when the factory is under total control of the Department, then invoking larger period does not arise and the demands would be barred by time. Further ground raised by the appellant is that for manufacture of cigarettes they have to discharge duty at the cut tobacco stage but the Revenue has not demanded duty at the cut tobacco stage, which is a process of manufacture, therefore, the proceedings are vitiated.
4. The learned Counsel Shri A.K. Jain contended that there has to be sufficient evidence to prove clandestine receipt of raw materials, proof of excess use of electricity, transportation clandestinely, sale through specific customers and receipt of flow back of funds. It is his submission that there is no evidence with regard to any person having purchased the final product viz., cigarettes. While discharging the price there could be no possibility to remove the goods when the entire factory is controlled by six officers and two sepoys of the Department. The officers were staying in the Guest House within the factory, therefore the private records meant for some different purpose cannot be used against the appellants to hold the allegation of clandestine receipt of raw materials and manufacture of final products and removal of the same. He submits that without evidence of purchasers of final products and receipt of flow back of funds, the charge of clandestine removal fails. In this regard, he relies on the ratio of the following judgment.
(i) L.M.L Ltd. v. CCE affirmed by the Supreme Court in 1997 (95) ELT A151.
(ii) Sekar Match Industries v. CCE .
(iii) A. Rathinam, Prop. Michael Match Works v. CCE .
(iv) Godfrey Philips India Ltd. v. CCE .
(v) Reliance Ind. v. CCE, Mumbai-III .
(vi) Kale Khan Mohd. Hanif v. CCE, Nagpur .
(vii) Hilton Tobaccos v. CCE, Hyderabad .
5. It is his submission that without evidence of manufacture of final products, sale of the same to specific customers and its removal through transporters and flow back of funds, the charge of manufacture clandestinely and removal of the same, cannot be confirmed. In this regard, he relies on the above noted judgment wherein it has been held that larger period is not invokable, when the factory is under physical control.
6. In response, the learned JDR points out that cross examination of six persons were given and that is sufficient to satisfy the principles of natural justice. On a specific query from the Bench as to the reason for not giving an opportunity of cross examination of officers and sepoys posted in the factory, the learned JDR only refers to the findings given by the Commissioner. The learned JDR relied on the following rulings.
(a) P.K. Ravindra v. CCE, Cochin
(b) Coney Electronics v. CCE, Chennai 2002 (148) ELT 548 (Tri.-Chennai.)
(c) Gulabchand Silk Mills Pvt. Ltd. v. CCE, Hyderabad-II
(d) Bula Ghosh v. CC, Kolkata 2003 (157) ELT 69 (Tri.-Kolkata).
(e) CCE, Coimbatore v. Acufil Machines 2004 (177) ELT 326 (Tri.-Chennai.)
(f) Saraswati Engineering Works v. CCE, Mumbai-III .
(g) K. Maickam v. CCE, Coimbatore .
(h) Ratlam Wires Pvt. Ltd. v. CESTAT, New Delhi .
7. On our perusal, we do not find any sufficient reason for rejecting the plea for cross examination of other persons and the officers of the Department. The Commissioner has only relied on the statements of the six persons and the private registers. The learned Counsel submits that plea for cross examining the officers have not been granted. We have carefully examined and perused the allegation and the findings. It is the fundamental principle of natural justice that Revenue should grant an opportunity to cross-examine the persons whose statement has been recorded. They should also grant an opportunity to cross examine the persons, who are having physical control over the factory. The non-grant of opportunity to cross examine the suppliers of raw materials and transporters including the persons who are supposed to maintain the register has clearly violated the principles of natural justice. The order on this ground itself is required to be set aside and matter has to be remanded for denovo consideration. The further plea that when the factory is under physical control of the officers and sepoys, then there cannot be an allegation of suppression of facts is a matter which has to be reexamined by the Commissioner in the light of the above noted judgment. Furthermore, we take note of the submissions made that there has to be evidence of sale of final products to specific customers. The Commissioner has to pin point to particular customers to whom these final products were sold and how the flow back of funds has taken place, which is vital for establishing the charge of clandestine manufacture and clearance of goods in terms of the cited judgment. The Revenue has to show also that there has been excess production of electricity. Mere reliance on private registers to confirm the demands is not sufficient in terms of large number of judgments relied on by the appellants. The case laws relied upon are RGR 2002 (140) ELT 187 and Ashwin Vanaspathi 1992(59) ELT 175 are also relevant in this case.
8. In view of the violation of principles of natural justice, we are constrained to set aside the impugned order and remand the case to the Original Authority for denovo consideration. The appellant shall be given full opportunity to cross examine on the relied upon witnesses including the officers and sepoys of the Department who were in physical control of the factory. The Commissioner has to re-adjudicate the matter within a period of six months from the date of this order. The appellant shall not take adjournment unduly in the matter. The plea of non-availability of evidence; non-flow of funds and demands being barred by time as raised by the appellant should be considered in the light of the ruling cited by the appellants. Thus, we set aside the impugned order and matter remanded for denovo consideration.
9. The Revenue seeks for setting aside the portion of the impugned order granting certain benefits to the assessee. In view of the Order-in-Original No. 27/2003 dated 23.12.2003 having been set aside, the Revenue appeals are also allowed by remand to reconsider the prayer of the Revenue.
(Pronounced and dictated in open Court)