Customs, Excise and Gold Tribunal - Delhi
Punjab Oil And Silicate Mills vs Collector Of Central Excise on 25 January, 1993
Equivalent citations: 1993ECR246(TRI.-DELHI), 1993(65)ELT268(TRI-DEL)
ORDER G.A. Brahma Deva, Member (J)
1. All these appeals involve common issues and therefore they are clubbed together and are being disposed of by this common order.
2. The appellants in all these cases are engaged in the manufacture of Sodium Silicate besides carrying on trading activity in sale of oil, soda ash, empty bags, empty drums, bleaching powder etc., as can be seen from the impugned orders. Since Sodium Silicate is a coal based industry and in view of huge variations between the figures given by the parties in the application accompanied by affidavits to the General Manager, District Industries Centre, Amritsar to get coal and the figures shown in the statutory Central Excise record viz. RG-1, the appellants were called upon to pay the differential duty as the duty was chargeable on the value based upon the figures supplied to the District Industries Centre on the charge of clandestine removal of Sodium Silicate. For instance in Appeal No. E/1578/88, the appellants have declared the value of their sale of Sodium Silicate manufactured and sold by them during the financial years 1980-81 to 1985-86 (upto 31/8/85) as under :-
"FINANCIAL YEAR VALUE OF SODIUM SILICATE
SOLD (Rs.)
1980-81 17,18,567.09
1981-82 16,84,456.00
1982-83 12,21,064.45
1983-84 10,87,872.83
1984-85 14,14,493.88
1985-86 09,72,156,28
(upto 31-8-1985)
But they had intimated the sales of Sodium Silicate to the Central Excise Department as under :-
"YEAR VALUE OF AMOUNT OF EXCISE
CLEARANCE DUTY PAID
BED (Rs.) SEP (Rs.)
1980-81 10,18,416.99 58,311.63 2,915.81
1981-82 8,08,501.40 6,581.50 329.11
1982-83 7,49,664.39
1983-84 7,36,675.00
1984-85 8,09,155.54 6,655.13 296.97
1985-86 8,46,675.34 3,625.31
1986-87 12,33,987.68
2.1 Accordingly the excise duty amounting to Rs. 5,58,165.20 was demanded on the charge of clandestine removal of Sodium Silicate valued at Rs. 37,78,302.64 effected during the period 1982 to 31-3-1986 as per show cause notice dated 27-2-1987. Similar is the position in other appeals and duty was demanded based upon the figures supplied to the Industries Department invoking the extended time limit of 5 years. It was contended on behalf of the parties that figures of sale furnished in coal applications and the accompanying affidavits included the sale of oil, soda ash, empty bags, empty drums, bleaching powder etc., which were not manufactured in the factory. Further it was contended that coal used in the factories is of grade-I which was not available in the market and since there was a cut in supply of coal, as such inflated figures of production were given in the affidavits so that more coal would be allocated. These contentions were negatived by the Collector who adjudicated the proceedings observing that figures supplied to the Industries Department for allotment of coal quota were inclusive of sale of Soda Ash etc., was without any basis. Further he observed that the authenticity of affirmed affidavits can't be disbelieved as it is an admissible evidence under Indian Evidence Act. It is a legal document of force and significance and is affirmed with care before specially empowered officers. Its contents are normally considered proof of oath to which it relates. The affidavits were executed before a Notary Public. Accordingly he confirmed the demand in all these cases. Hence these appeals.
3. We have heard Shri V. Sridharan, learned Counsel for the parties and Department was duly represented by Shri Rakesh Bhatia in all these cases.
4. Arguing for the appellants, Shri V. Sridharan submitted that affidavit filed by the parties before the other authority for different purpose cannot be taken as basis to arrive at the conclusion that so much quantity of the product in question was manufactured by the appellants in the absence of any other corroborative evidence. He said that the authorities while adjudicating the proceedings must have uncontrovertible material before them as it was held in the case of M. Koyakutty, Kayam - Kalam v. Collector of Customs & Central Excise, Cochin 1978 (2) E.L.T. (J 494) and even if the appellants have given inflated figures for the purpose of getting more advances that alone should not be held to be conclusive proof with regard to the allegation of clandestine removal as it was observed by the Tribunal in the case of Rakesh Bulb Industries v. Collector of Central Excise, Pune -1989 (22) ECR 171.
5. He said that when the Court has not ordered the proof of a fact by an affidavit it is no evidence nor an affidavit can be used as evidence under the Evidence Act as observed in the case of Mansingh Lamba & Sons and Ors. v. Collector of Customs & Central Excise, New Delhi 1987 (32) E.L.T. 730 relying upon the decision of the Supreme Court in the case of Viswanathan v. Wajid, AIR 1963 SC 1, wherein it was held the principle while interpreting the order XIX, Rule I of the Code of Civil Procedure. He also drew our attention to the observations made by the Supreme Court in the case of Dr. N.C. Singhal v. Union of India that admissions in affidavits held by the Govt. which are mere expressions of opinion limited to the context and not specific assurances, are not binding on the Govt. to treat estoppel. He also referred to the decision of the Supreme Court in the case of Sudha Devi v. M.P. Narayanan that affidavits are not included in the definition of evidence in Section 3 of the Evidence Act and can be cited as evidence only if for sufficient reason Court passes an order under XIX Rule 1 or 2 of the C.P.C.
6. He submitted that sales figures given in the affidavits were highly inflated figures with an intention to get maximum quota of grade I coal for their requirements as there was cut off at every stage and in fact they did not get so much of quantity as requested as per their application. In this connection he referred to the pages 68 to 70 of the paper book in Appeal No. E/1579/88 to show that for the year 1980-81 and 1981-82 in respect of which period in relevant coal applications figures of sales were claimed to be Rs. 30,61,664.91 and Rs. 29,35,583.00 respectively, the Industries Department for the purpose of entitlement of coal accepted in sale of Rs. 15 lakhs only for each year. Likewise, for 1982-83 as against sale of sodium silicate of Rs. 12,94,574.00 claimed in application, the District Industries Centre accepted only the figure of Rs. 5,72,184.64 i.e going by appellants statutory record RG-1 maintained under Central Excise control.
7. He said that filing of an affidavit is not a statutory requirement for allotment of coal but was filed along with application as per departmental procedure as insisted by the District Industries Centre. At any rate the inflated figures given in the coal application accompanied by affidavit cannot be taken as conclusive proof to determine the value of clearances for the purpose of excise duty. In support of his contention he strongly relied upon the decision of the Madras High Court in the case of State of Tamil Nadu v. Indian Crafts and Industries 1970 25 STC 466 under Sales Tax Act and read with the gist of the decision appeared in Head Notes as under :
"The assessee, in order to obtain a higher quota to import a higher quantum of raw material, inflated his production year after year when applying to the Director of Industries and Commerce, but he was always granted by the Director only less than one-fourth of the quantum applied for. This allotment was regularly accounted for in the books of account of the assessee. The assessing officer reopened the assessments of the assessee for the previous years under section 16 of the Tamil Nadu General Sales Tax Act, 1959, on the ground that the accounts did not reflect properly the production and also levied penalty. The Sales Tax Tribunal on appeal held that there was no suppression. On a revision by the State :
Held, (1) that merely because the assessee conducted himself in a manner which was not conducive to ethics, the taxing authority could not invoke the provisions of reassessment and penalise him; (2) that the finding of the Tribunal that the assessee utilised in his business only the actual quantum granted by the Director and that had been duly accounted for in the regular books of account maintained by him, was essentially a finding on a question of fact which could not be interfered merely on suspicion.
The morality and intention of an assessee does not enter into the field of adjudication in taxing law. If an assessee can by a process which is acceptable in law avoid or evade taxation, he can do so."
8. While countering the arguments, Shri Bhatia reiterated the findings given in the impugned orders and emphasised that since duly sworn affidavits were filed by the parties before the other wing of the Government, they are estopped from taking different stand for the purpose of excise duty. He said that excise authorities were fully justified in relying upon the figures given in the affidavits to arrive at the value of clearances as the affidavits were nothing but voluntary declarations given by the parties.
9. We have carefully considered the arguments advanced on both sides and perused the records including citations. Issues arise for our consideration in these cases are whether the Department was justified in relying upon the figures given in the affidavits filed before Department of Industries for the purpose of allotment of coal are sufficient material to hold that the appellants have clandestinely manufactured and cleared the goods without payment of duty and sworn statement given by the appellants before the other authority in different context for different purposes can be taken as a conclusive proof in the absence of any other corroborative evidence.
10. In all these cases it is clear from the show cause notices issued by the Department that the appellants were charged with clandestine removal of Sodium Silicate based upon the figures furnished in the affidavits filed before the Department of Industries and duty was demanded accordingly. The appellants in all these cases had denied the manufacture of so much of quantity of Sodium Silicate from the beginning and the same denial were repeated in hearing during the adjudication proceedings. If really any manufacturing process had been carried out by the appellants to manufacture so much quantum of Sodium Silicate as alleged by the Department, burden lies on the Department to prove so much quantity of Sodium Silicate was manufactured by the appellants tallying with the figures given in their affidavits to the Department of Industries with corroborative evidence. In the absence of proof for having manufactured so much quantity of Sodium Silicate reliance only on the figures furnished to the Department of Industries are insufficient to come to the conclusion that the appellants have manufactured so much quantity of Sodium Silicate as mentioned in their affidavits filed before the Department of Industries.
11. Now we shall consider and analyse the ratio of the decisions in the following cases :-
(i) In the case of J.A. Naidu, Etc. Etc. v. State of Maharashtra 1983 (13) E.L.T. 1611, the Supreme Court while dealing with the criminal appeal matter relating to contraband articles under the Customs Act, observed that "it was for the prosecution to prove affirmatively that the contraband articles were in the conscious possession of accused and that the accused had received currency notes as claimed by the prosecution. To presume the accused guilty unless he proved innocence was not the correct approach to the appreciation of evidence. Nor the suspicion, however grave, can take the place of proof. Therefore, conviction based on such criteria was illegal and invalid".
(ii) The Tribunal has taken the view in case of Ebenezer Rubbers Limited v. Collector of Central Excise, Ahmedabad 1986 (26) E.L.T. 997 (Tri.) that the penalty cannot be imposed on the basis of material which points out to only a possibility of clandestine removal and further held that clandestine removal must be proved and supported by sufficient evidence so as to demand duty by observing that "there is no evidence that the department has made any attempt to check with the octroi authorities whether the payments of the appellants have been as per those invoices. These invoices have not got linked or related to any other documents which would establish the existence of any goods other than those accounted for".
(iii) Further it was observed by the Tribunal in the case of Premier Packaging Pvt. Ltd. v. Collector of Central Excise, New Delhi 1986 (26) E.L.T. 333 (Tribunal) that "Demand Show Cause Notices containing no evidence or specific allegation of clandestine manufacture and removal is vitiated. Demand based on unwarranted assumption is illegal. Rule 9 is not applicable when there is no evidence of clandestine removal and manufacture - Rule 173E which provides for assessment on the normal quantum of production at a given time determined by the proper officer, is not ap-plicable when no norm of production has been fixed".
(iv) In the case of Alwyn Industrial Corporation v. Collector of Central Excise, New Delhi, Delhi 1988 (33) E.L.T. 376 (Tribunal), it was held that in the absence of any proof of manufactured goods the reliance only on the letters from the Bank is insufficient to come to the conclusion that the appellant was engaged in the manufacture of wires and cables.
12. Further the case of the Department in charging clandestine manufacture and removal of the goods was based on figures furnished to the Department of Industries or as admitted by the party in their affidavits filed before the Department of Industries for getting the coal. We are of the view that any information obtained from the Department of Industries is not sufficient proof to show that the goods were manufactured unless it was substantiated with other evidence to show that the goods were clandestinely manufactured. On the same analogy we hold that even admission, confession or sworn statement given by the appellants before the other authority in different context for different purpose cannot be taken as conclusive proof in the absence of positive evidence adduced by the Department. At best it may be an inference but not substantial proof. Further this aspect was not considered by the original authority. Under taxing statute while concluding best judgment assessment it should be based upon facts and circumstances found by the assessing authority himself and he is not entitled to act wholly on the basis of the report made by the other authorities or an admission made by the party before the other authorities. In the facts and circumstances of the case and taking into consideration the ratio of the decisions cited (supra), we hold that the department was not justified in arriving at the conclusion that the appellants have clandestinely removed the goods in question based upon the figures furnished to the Department of Industries.
13. In the view, we have taken, we set aside the impugned orders in all these cases and, accordingly, these appeals are allowed.