Customs, Excise and Gold Tribunal - Delhi
M/S. Seemax Industries, Shri L.R. ... vs Cce, New Delhi on 11 April, 2001
Equivalent citations: 2001(77)ECC68
ORDER
P.S. Bajaj
1. This order will dispose of three stay applications bearing Nos.E/1728 to 1730/2000-NB arising out of appeal Nos.E/3089,3092-3092/2000-NB filed by the appellants. In the first stay application waiver of Central Excise duty of Rs.6,18,72,793/- and penalty of the equal amount imposed on the first appellant by the Commissioner(Adjudication) has been claimed while in the other two stay applications waiver of penalty of Rs.3 lakhs and of Rs.1 lakh has been prayed for by the appellants No.(2) and (3) respectively which had been confirmed on them by the Commissioner(Adjudication).
2. The facts giving rise to these stay applications may briefly be stated as under:
3. The company M/s.Seemax Industries Ltd. [SIL(appellant No.1)] was engaged in the manufacture of steel tubes, MS pipes and SS Mast or Towers falling under Chapter Heading 7306.90 and 7308.20 of the CETA. Earlier this company was working in the name of M/s.Steel Tube Pvt. Ltd.(in short SST). Another firm known as M/s.Structural Galvanising Industries(in short, SGI) was also engaged in the activity of galvanisation of the pipes and was situated inside the factory premises of the company SIL but was neither registered with the Central Excise Department nor paying any duty on galvanised pipes on the ground that mere galvanisation of the duty paid MS pipes did not attract any duty. The MS black pipes were manufactured by the company M/s.SIL/SSI and remained exempt from duty till 28.2.94 vide Notification 202/88 dated 28.5.88. That notification was, however, rescinded later on and the company SIL started paying duty w.e.f. 1,3,94 but claimed exemption under Notification No.1/93 dated 28.2.93. The show cause notice dated 5.2.99 was issued by the Additional Directorate General, DGAE(CE) New Delhi to all the appellants regarding the evasion of Central Excise duty in all of Rs. 6,18,72,793/-(Rs. Rs.25,35,095.80 on account of clearances made as per the books of accounts, Central Excise record and other registers, files, invoices and vouchers, Rs.5,79,58,710/- on account of clearances shown in the audited balance sheets and Rs.1,47,924 due to local sales and Rs.12,31,063 on account of non-availability of SSI exemption) during the years 1994-95 to 1996-97. While verifying the physical stock of the finished goods with the stock entered in the RG.1 Register, 109.440 MT of steel tubes and 27 SS Mast were found short. The duty amounting to Rs.2,72,889/- was involved on the said shortages which was debited at the spot by the Anti Evasion Officers in the RG.23A/II Register of the company SIL vide Entry No.129 dated 27.2.97. The appellant, Shri L.R. Sharma was the Managing Director of the Company M/s.SIL and also proprietor of M/s.SGI, while Suresh Sharma was the Manager of the company SIL, . In the show cause notice the penalty was also proposed to be imposed on them under Rule 209-A of the Central Excise Rules.
4. In reply to the aforesaid show cause notice the appellants contested the liability to pay the Central Excise duty by denying the allegations made therein. They denied the shortage of the finished goods. The clearances of the goods, as alleged in the show cause notice, were also denied. They also avered that the entire quantity of GI pipes was actually galvanised out of MS black pipes purchased from the open market and that purchase was made in the name of SIL. They further avered that the books of accounts were fake and fabricated for the purpose of projecting the sound financial status of the company in order to get their public issue subscribed and that there had been no actual clearances or sale of the goods as recorded in their books.
5. The Commissioner(Adjudication) did not accept the version of the appellants and confirmed the duty amount and imposed the penalties on them as detailed above.
6. The learned counsel for the appellants has claimed the waiver of the duty and penalty amounts while arguing on the stay applications on two grounds. Firstly that the impugned order of the commissioner is liable to be set aside as opportunity for cross-examining the witnesses whose statements were recorded during investigation by the Excise Officers was not afforded to the appellants and as such their statements could not be relied upon. Even the copies of the relied upon documents were not supplied. Secondly, that the appellants were facing financial hardship for having gone in losses in the business.
7. On the other hand, the learned SDR while refuting both these grounds of the counsel has contended that the books of accounts were prepared by the employees of the appellants and the entries made therein regarding the production and clearance of the goods had been rightly relied upon by the adjudicating authority. The appellants were even allowed inspection of the record as and when they wished during adjudication proceedings. Regarding the financial hardship, the learned SDR has argued that this has been created by the appellants themselves with a view to avoid payment of the duty and that they cannot be permitted to take advantage of their own wrong, even if it is taken that they had suffered some losses.
8. We have heard both the sides and gone through the record.
9. The bare perusal of the impugned order shows that the demand of duty in all to the tune of Rs.6,18,72,793/- had been confirmed on the appellants on account of clearances made by them as per their own books of accounts, registers, vouchers and despatch registers during the years 1994-95. Their record showed that they galvanised and removed 460.318 MT GI pipes valued at Rs.75,85,455/- without payment of duty. Likewise during the period 1995-96 they removed 375.650 MT GI pipes valued at Rs.66,77,876.72 as per the record without payment of duty. The internal gate passes, despatch registers and cash books also showed the removal of pipes valued at Rs.9,82,689.70 involving duty of Rs.1,7,924/- without payment of duty during the year 1996-97. The correctness of the entries in the books of accounts and other record was accepted by Ashwani Bajaj, Manager (Finance & Accounts) of the appellants in his statements recorded on 27.2.97 and 20.2.98 as well as by G.K.Narula, Chartered Accountant of the appellants.
10. The plea of the appellants that the entries in the books of accounts regarding clearances were fake made with a view to present a rosy picture of the working of the company in order to get the public issue subscribed, was prima facie rightly not accepted by the adjudicating authority. The Chartered Accountant, J.K.Narula who audited the accounts of the appellant company admitted the correctness of the entries made therein. Even Ashwani Bajaj, Manager(Finance & Accounts) did not dispute the correctness of the entries. Their cross-examination by the appellants was not necessary as they were their employees and at no state they doubted their varacity in the preparation of the record. The books of accounts and other record were prepared and audited by them as per the wishes and directions of the appellants. Therefore, prima facie it is difficult to hold that the impugned order of the COmmissioner suffers from any legal infirmity or that it had been passed in violation of the principles of natural justice as contended by the counsel so as to allow the prayer of the appellants for total waiver of duty and penalty amounts.
11. Regarding the financial hardship of the appellants no cogent convincing material has been placed on the record. Moreover, the alleged losses suffered by the appellants after the period involved in the present appeals during which there had been evasion of the payment of excise duty of huge amount by them, cannot be made ground for allowing total waiver of the duty and penalty amounts. The duty involved is of Rs.6,18,72,793/- which the appellants did not pay during the years 1994-95 to 1996-97 in question. The copies of the balance sheet placed on record to prove the financial hardship due to losses suffered by the appellantgs cannot be attached overdue importance and authenticity. These had been got prepared by them from their same Chartered Accountant, Shri J.K.Narula from whom they initially got audited the books of account and other documents and later on doubted the correctness of the entries therein before the adjudicating authorities for avoiding the payment of excise duty. The copies of the income-tax returns have not been placed on file to corroborate their ple of financial hardship. In those returns they must have shown the detail of losses and thein true financial picture. Moreover we cannot lose sight of of the fact that the Government also needs money for implementing and promoting welfare schemes for the welfare of poor. The Government cannot be asked to write off their legimate claim for the excise duty for the simple ground that the appellants have allegedly suffered losses which may even be due to their own mismanagement of the affairs and funds of the company.
12. Moreover, equity and balance of convenience are also not in favour of the appellants. According to their own version referred to above they were getting prepared the false record from the Chartered Accountant in order to present picture of positive financial position to get their public issue subscribed while it was actually not so. This shows that they planned to hoodwink the public and to play fraud with them. This being their conduct, the equitable relief of the waiver of the duty amount, in our view cannot be allowed to the company appellnt No.1. The affairs of the company were managed by the appellants No.(2) and (3) and the evasion of the duty during the years in question was done by them and as such prima facie the imposition of penalty on them cannot be said to be non-justiciable under the law. No relief for the waiver of the pre-deposit of the penalty amounts on them in our view aLSO deserves to be allowed in the light of the discussion made above.
13. In view of the discussion made above, the appellant No.(1) is directed to deposit the entire duty amount of Rs.6,18,72,793/-(Rupees six crore eighteen lakh seventy two thousand seven hundred and ninety three only) within eight weeks and on deposit of the same equal the penalty amount of Rs.6,18,72,793/-(Rupees six crore eighteen lakh seventy two thousand seven hundred and ninety three only) shall stand waived and recovery stayed. Similarly, appellants No.(2) and (3) are directed to make pre-deposit of the penalty amount of Rs.3 lakhs(Rupees three lakkhs only) and of Rs.1 lakh(Rupees one lakh only) respectively within a period of eight weeks from the date of receipt of this order. If the appellants failed to make these pre-deposits within the stipulated period, their appeals will become liable to be dismissed under Section 35-F of the Central Excise Act, 1944.
Matter to come up for reporting compliance and further order on (2.7.2001)