Customs, Excise and Gold Tribunal - Mumbai
J.I. Gandhi Silk Mills Ltd. And Ors. vs Commissioner Of Central Excise And ... on 7 June, 2000
Equivalent citations: 2000(70)ECC811
ORDER J.H. Joglekar, Member (T)
1. This batch of application relates to same number of appeals arising out of the same impugned order. These are, therefore, being disposed of together by this common order.
2. We have heard Shri Willingdon Christian appearing alongwith Shri Mayur Shroff, Advocates for the applicants. We have also heard Shri Deepak Kumar, SDR for the department.
3. On 30/31.3.98, the Officers of the Central Excise searched the premises of M/s. J.I. Gandhi Silk Mills and also the premises of their employees and traders who had sent grey fabrics to them for processing. Certain incriminating documents were seized. Statements of the concerned persons were recorded. At the end of the investigations, show cause notice was issued alleging evasion of duty and proposing penalties on concerned persons. The Commissioner of Central Excise, Surat-I, after hearing the concerned persons passed the order now impugned before us. In this order, he confirmed duty amounting to Rs. 86,92,118 leviable on the fabrics clandestinely manufactured and cleared by M/s. J.I. Gandhi Silk Mills (hereinafter called "the Mills".) He imposed equal amount of penalty under Rule 173Q and directed payment of interest for the delayed payment. He confiscated plant, building etc. but permitted its use on payment of redemption fine of Rs. 5 lakhs. He also imposed penalty of Rs. two lakh's on Shri Hariharbahi J. Gandhi, Director of M/s. J .1. Gandhi Silk Mills and also penalties of varying amounts on the traders. He ordered confiscation of the processed fabrics seized from the factory which fabrics had not been entered in the statutory registers and prescribed fines for their redemption specifying payment of duty in addition thereof. Against this order, the appeals have been filed and also the present applications.
4. During the search, certain note-books were found and also found were a number of Kachcha delivery challans indicating quantities of grey fabrics received for processing from several traders. Some of the challans were found from the residence of the employees of the mills. The figures given in the note-books and the kachcha challans turned the basis for quantification of the duty evaded by the mills. The Ld. counsel at the time of arguments had two major submissions on the computation. He submitted that the grey fabrics during their journey to the finished goods stage underwent the process of stentering 3 to 4 times. According to him, it is the mistake to take the entire quantity shown in the private books as the quantity on which the duty was evaded. By virtue of the fabrics having been stentered more than one time, it is his submission that the actual quantity of which the duty was evaded was about 1/3 of what has been held by the Ld. Commissioner. He relies upon the certain books presented to the department by Shri H.I. Gandhi, Director of the mills during the course of his statement on 12.1.98. The dyeing books was referred to in his statement juxtaposing the entries relied on by the department showing that the meterage adopted by the department was inflated.
5. Shri Deepak Kumar submits that no congnizance be taken on these documents filed after nearly five and half months of the initial search and investigations.
6. We find that the note-books relied on by the department show daily production in three different manners, viz. "dyed" "printing" & "Vis x AC". The figures against these three are totalled together and cumulative total is also shown. The document later produced by the Director of the mills show processing of two stenter machines titled as "Prima Tex." The entries would appear to assist the counsel's statement that these batches of fabrics repeatedly underwent stentering and that only the quantities shown as "dyed" should be taken to be the final production which is about 1/3 of the production shown. Shri Deepak Kumar submits that apart from the lack of credibility of the registers or note-books produced subsequently, the fact remains that there was a third stenter machine which was operational for about two months prior to the date of search and therefore, the subsequently produced documents cannot go to reduce the figures from which the figures has been produced by the department.
7. We have considered the submissions and find that the seized books viz. Deep Jyot and Samrat show the figures of the goods finally produced; whether dyed or printed, whereas, the documents later produced would appear to give figures of fabrics processed by stentering. We also find that the subsequently produced documents show the timings of such process. The timings of a representative entry i.e. on 11.2.98 would run for 10 to 12 hrs. To a specific query, Shri Willingdon clarified that the mills runs all three shifts. Prima-facie, we do not find that the figures given in the documents later produced would reduce the validity of the figures on which the department placed reliance but it would also appear that if the later productions are authentic documents then only a part thereof has been produced as much as the documents for the third stenter has not been produced.
8. We have also taken note of the other submissions such as the Commissioner not having been granted permission to cross-examination but find that they were not germane to the argument on the computation of the duty evaded. Attempt had been made to rely upon certain affidavits filed by the concerned persons in effect retracting the earlier statements made by them. One such affidavit is by Shri H.I. Gandhi, Director of the mills. This affidavit was dated 1.4.98 although the signature of the depondent is on 31.3.98. As per the deposition, the deponent was with the officers till he was admitted in the hospital. The panchnama however shows that subsequently, Shri Gandhi rejoined the panchas and his medical condition was declared in the certificate as normal. The proceedings at a number of places indicate the admission of Shri Gandhi on various occasions when the evasion was pointed out that the goods had been cleared without payment of duty.
We have also seen the affidavit of Bilal Ismail mony, supervisor of the Mills. In the affidavit it has been claimed that his signature had been taken on his statement by coercion. Shri Willingdon fairly conceded that there was no statement of this deponent on record at all. We, therefore, do not give any value to the said affidavit.
9. On examination of the various documents, we find that prima-facie, the applicants have failed to make a case that the quantum of evasion was less than what was alleged.
10. Shri Willingdon did not advance any argument on the financial hardship nor is there any such ground in the stay applications. It is however, claimed in the application that against the duty confirmed, a sum of Rs. 32,45,194.42 has already been deposited. We have seen the statement annexed to the application. We find that a sum of Rs. 9,68,265.92 was paid as duty for release of the seized fabrics. This would not merit any consideration when examining the advance payment. The statement shows that Rs. two lakhs had been deposited by the mills which fact is also reflected in the annexure to the show cause notice. It is claimed that duty of Rs. 20,76,92850 had been deposited by the traders against the demand confirmed against the mills. Shri Deepak Kumar submits that this would have to be examined in correlation with the document which may not be possible at this stage especially when this was brought to the notice by the Ld. Counsel at the time of arguments.
11. On consulting both the sides, it appears that the unpaid portion of the duty confirmed is Rs. 64,15,190. This, as per Shri Deepak Kumar, is subject to the verification. At this stage, we direct the Mills to deposit a sum of Rs. 60 lakhs (Rupees Sixty lakhs) as precondition to hearing of their appeals. We also in addition direct them to deposit a further sum of Rs. 5 lakhs (Rupees five lakhs) towards penalty. On such deposit is being made, the need to deposit the reminder of the duty as also the penalty shall stand waived and its recovery stayed.
12. As far as the traders are concerned, the statements admit to their having been received goods without payment of duty. A number of traders also made deposits towards the duty evaded. The Commissioner appears to have imposed penalties as of certain proportion to duty evaded. We, therefore, direct each of the traders on whom penalties have been imposed to deposit 20% thereof as precondition to hearing to their appeals. On such deposits being made, the need for depositing the reminder shall stand waived and its recovery stayed.
13. All applicants are given a period of ten weeks to make the payment. The period is to be computed from the date of receipt of this order.
Report compliance on 14.8.2000.