Customs, Excise and Gold Tribunal - Calcutta
K.R. Steel Union Private Ltd. vs Collector Of Central Excise And Customs on 6 February, 1987
Equivalent citations: 1987(31)ELT375(TRI-KOLKATA)
ORDER S.K. Bhatnagar, Member (T)
1. Shri Das submitted that in this case initially in the show cause memo. The appellant was charged with the removal of a very large quantity without proper accountal and without payment of duty. However, during the course of adjudication, the Collector was good enough to accept the explanation in respect of most of the quantity (a huge quantity of more than 5,000 M.T.) and the dispute is now centred round two quantities:-
(1) 39,900 MT of steel ingots and (2) 79,320 MT of ingots mentioned in (v) page-6 of the Collector's order. It was their contention that in respect of these two' quantities, the show cause notice is vague and the department has not mentioned in the notice specifically as to with reference to which documents these quantities have been arrived at. Therefore, they were strictly speaking, rather handicapped in replying. However, on their own, they had checked up their records and it was their contention that both these quantities were duly cleared on payment of duty. They had produced the G.P.-1's and submitted that these were actually removed first from their factory to Sonai stockyard and then they were supplied to the parties concerned.
2. The Collector has, however, not accepted their contention because in their initial reply they had mentioned that they were delivered to Mr. Khemchand Rajkumar and subsequently they had mentioned that they were supplied to Sonai Stockyard. It was their contention that the fact is that from the factory they were removed under GP-1 to their Sonai Stockyard and, thereafter they were supplied to their customers.
3. Regarding 79.320 MTs they had submitted that they were part of a consignment of 103.4W) MT which were sent under GP-1s dated 1-10-1981 to 20-10-1981. However, out of this stock, the quantity in question was returned by the customers and was, therefore, sent to their stockyard.
4. The Collector has not accepted their explanation because the quantity cleared does not tally with the quantity returned. But it was their submission that only part of the quantity supplied was returned and that is the reason for the difference in the figures.
5. In view of the difference in figures, the Collector has also not accepted the challans submitted in support of their contention.
6. It was also their contention that the Collector's finding with reference to Rule 173H was vague. Once a very large quantity had been accepted by the department duly account for and cleared on payment of duty according to rules the Collector should have specifically mentioned in the finding and the operative part of the order as to with reference to which quantity he has imposed the penalty of Rs. 10,000/-. It was his contention that in any eventuality the 79.320 MTs of steel ingots and 39.100 MTs of steel ingots with reference to which the appeal has been preferred before this Tribunal was never received back in the factory.
7. Therefore, the charge under 173H is also not established and" the imposition of penalty was not justified.
8. In view of the above explanation they submit that the Collector's order should be set aside.
9. Shri Chakraborty, speaking for the department submitted that the Collector has dealt with these two quantities in details in the internal page-4 of the Order-in-Original where the Collector has mentioned at length the parties submissions with reference to these two quantities and in internal page-6 of the order in para (v) he has recorded his observations and findings.
10. The fact is that these goods were admittedly removed from the factory but the appellant has not been able to show the GP-1s under which they were initially removed. The department has charged the appellant with two distinct type of offences -
(1) that of removal of goods without payment of duty;
(2) of return of duty paid goods without complying with Rule 173H.
11. In respect of the first charge, the appellant has not been able to correlate the document produced in the form of GP-1 or challans with the goods in question and insofar as 39.900 MT is concerned his explanation has also varied. At first, it was stated that the goods were delivered to M/s. Khemchand Rajkumar from the factory under the GP-1s; subsequently he changed the stand that they were delivered to their customers from Sonai stockyard.
12. In view of these facts their explanation was not found satisfactory.
13. In respect of 79.320"MT the appellant was not able to show that the GP-ls related to a different quantity and the appellant Has not explained the different quantity.
14. The department is concerned with the quantity which was returned by the appellant's customers to the appellant's duty paid stockyard. It was only concerned with the quantity which was cleared from the factory and returned to the factory because 173H applies only to such cases.
14A. Furthermore, he would like to say that the penalty of Rs. 10,000/- has been imposed keeping in mind the very large quantity which was removed from the factory on payment of duty but was received back in the factory from the converters without complying with all the conditions of Rule 173H.
15. However, he accepts that in case of Rule 173H violation it was not necessary to invoke Rule 173Q and the department could have confined itself to Rule 210.
16. I find that the learned Counsel's submissions to the effect that the show cause notice is rather vague, is correct, inasmuch as in respect of 39,900 MT of steel ingots Annexure 'A' of the show cause notice indicates an entry as indicated in the Annexure to this order.
17. From this, it would be seen that Column 5 records two opposite and contrary things simultaneously in respect of the same (total) quantity inasmuch as it mentions, inter-alia, the following Words :-
Under GP-1 Without Gate Pass Nil duty On payment of duty In other words, the position has not been stated clearly.
18. It is evident that existence or otherwise of the gate passes is a question of fact.. If the gate passes were there that is one situation and if the gate passes were not there, that would be another situation. Both could not be true simultaneously.
19. Therefore, the appellant's contention that the show cause notice is confusing and vague has strong force.
20. The very fact that there is mention ot some gate passes showing clearance at nil duty and others showing payment of duty raises a question as to why in any case that quantity has been included in the Annexures which was admittedly cleared on payment of duty, and why the chow cause notice has been issued in respect of such quantities for which the gate passes showing payment of duty had been produced? In any eventuality, the burden of proving the charges is even otherwise on the department. In this connection, I note that the gate passes/challans were (also) produced before the Collector. But the learned Collector has not recorded a clear-cut finding with reference to them. The Collector's order does not in so many words say that he had examined the gate passes/challans but even assuming that he had done so, it was not clear as to what were the particulars he found recorded thereon!
21. The Collector has not accepted these documents merely on the ground that the appellants had first referred to M/s. Khemchandra Rajkumar and subsequently in their Sonai stockyard at Calcutta. This by itself, in my opinion, is not sufficient enough to disregard the gate passes/challans. It was open to the department to show whether or not these gate passes indicated clearance to Sonai Stockyard or M/s. Khem Chandra Rajkumar or M/s. Calcutta Steel Co. or?-whether it was possible to correlate these documents with the goods by question. However, the department has done nothing of this kind and the learned Collector has not recorded any specific finding in this regard. This is rather surprising inasmuch as once the gate passes/challans of particular dates were produced before the learned Collector, it should not have been too difficult for him to take note of the indicated places of clearance and other particulars and to judge the correctness or relevance of the documents and record his observations.
22. The above discussion shows that on the one hand, the show cause notice has self-contradictory observations incorporated in its Annexure and is, therefore, a vague, confusing and improper notice; On the other hand, the Collector's scrutiny is incomplete and his 'finding' rather vague. In contradistinction, the appellants have given a plausible explanation and, therefore, I consider that the charge of clandestine removal of these goods with intent to evade duty, has not been established beyond doubt.
23. As far as the quantity of 79,320 MT is concerned, I find that the Annexure "A1 of the show cause notice does not indicate any such quantity against the column meant for M/s. Calcutta Steel Company. The Annexure also does not indicate 103.HO MT mentioned by Collector. In fact, the only figure of 79,320 MT of steel ingots which is mentioned in Annexure 'A' has been so mentioned with reference to Ganesh Forging Co., Belur, Howrah and against it, the column 5 entry incorporates the words without coverage of gate passes'. The Annexure does not refer to any other document(s). However, it is apparent from the Collector's order (Paragraph-2) that the appellants had produced documents to show that it was a part of 103.WO MT sent to M/s. Calcutta Steel Co. Khardh and the Collector has not accepted this submission on the sole ground that the quantity received back differs from the quantity which had been removed under the gate passes. This is a rather strange argument inasmuch as it is not necessary for a customer to return the total quantity received as such, and it is open to him to retain whatever he found satisfactory and to return what is not found to be satisfactory. Furthermore, it is evident from Collector's own orders that evidently documents in the form of gate passes and challans indicating detailed particulars including the endorsements on challans regarding the quantity returned were produced before him. Under the circumstances, it was for the department to show that these documents were not relevant or did not relate to the goods in question. The Collector has, however, recorded no such finding. Therefore, I consider that the learned Counsel is correct in pointing out that the department has not discharged its burden and the charge of clandestine removal of the goods in question has not been proved beyond doubt.
24. In fact, since the quantities in question in this appeal are said to be part of a very large quantity about which the show cause notice was issued, it is necessary to view the show cause notice as a whole and the appellants case as a whole with reference to the same. When so viewed, I find that the learned Counsel is correct in pointing out that various allegations have been made with reference to a huge quantity of more than 5,000 MT and the Collector has himself accepted their explanation regarding 5,000 MT and only in respect of these relatively small quantities, he had some reservations. Actually, the appellant's submissions was found satisfactory by the Collector himself even in respect of a very large portion of quantity of 634.940 MT of steel ingots (referred to in the show cause notice but not mentioned 'as such' in any Annexure). Thus, the Collector has himself found that 440.235 MT and 75.485 MT were accounted for in the registers and were removed to M/s. Calcutta Steel Co. Ltd. and M/s. East India Industries respectively under cover of delivery challans and gate passes in lieu of GP-1. In these circumstances, the Collector should have realised that read as a whole the department's chages were apparently far removed from facts and in the above context when the appellants had given plausible explanations and submitted documents the Collector should have in the normal course either believed them and accepted the documents or at least extended the benefit of doubt but the Collector has chosen neither of the two causes but announced his verdict with reference to vague charges in...vague manner. This is not Proper.
25. The Collector has also failed to notice that the show cause notice is itself bad in law as it not only includes contrary observations/remarks but incorporates quantities admittedly cleared on GP-1 on payment of duty, as apparent from the above discussion as also from another example evident from Entry-3 in Annexure 'A' reproduced in the Annexure to this order.
26. It also appears that the department is in a state of confusion regarding the implications of invoking Rule 173H. The minute one invokes Rule 173H, by necessary implication, one accepts the duty paid character of the goods and if some or all the conditions of Rule 173H are not satisfied the consequence which immediately results is that the assesses is deprived of the benefit of 173H as mentioned in Para-2 of the rule, i.e. he may be required to pay the duty again. Since this would itself amount to a de-facto punishment equal to the amount of duty, that is why apparently the Govt. and the legislature thought it fit not to provide for any further penalty under this rule.
27. In the instant case, the learned departmental representative has conceded that in such situations it was not necessary to invoke Rule 173Q and the department could have confined itself to Rule 210. If this preposition was accepted, it would be found that Rule 210 provides for a maximumim penalty of Rs. 1,000/- and, therefore, according to the department's own case, there was no cause for imposition of a penalty of Rs. 10,000/- by the Collector and the order was clearly wrong. Furthermore, as the above discussion shows, in the ordinary course, even Rule 210 need not be invoked and for imposing a penalty it is necessary to show a case of deliberate defiance of law, negligence or criminal intent, which the department has clearly failed to do in the instant case.
28. Looking to the facts and circumstances of the case as a whole, I find that the department has not plausible to establish any of the charges framed against the appellant. The show cause memo (read as a whole) is vague, inconsistent and self-contradictory and so are the Collector's findings with reference to the same. On the other hand, the appellants have submitted a plausible explanation and looking to the facts and circumstances as a whole, there was no reason to doubt the same. The order of the learned Collector is, therefore, set aside and the appeal is accepted.
29. This also disposes of the Cross Objection filed by the department.