Customs, Excise and Gold Tribunal - Tamil Nadu
Sri Ram Automotive Alloy Castings Pvt. ... vs C.C.E. on 5 March, 2001
Equivalent citations: 2001(76)ECC645, 2001(132)ELT179(TRI-CHENNAI)
ORDER S.L. Peeran, Member (J)
1. In this appeal, the appellants have challenged the confirmation of demands of Rs. 11,18,152 with regard to the exisable goods said to have been manufactured and cleared by the appellants without payment of duty under Rule 9(2) of the CE Rules read with Section 11A(1) of the CE Act, 1944. Cast iron articles of aluminium were also seized and the same were provisionally released on execution of B-II bond and appropriation of Rs. 75,000.00 from the Bank guarantee executed by the appellants was ordered, besides imposition of penalty of Rs. 2 lakhs under various rules.
2. In brief the allegations brought out against the appellants have been summarised by the Commissioner in paras 11 & 12 of the impugned order which are reproduced below :
"11. From the above facts, it appeared that ingots were taken for manufacture without any entry in records; that prescribed procedures had not been followed by the assessee in respect of removal/receipt of in-puts/semi-finished goods under Rule 57F(2)/(3); that even the goods after processing, received from job workers had not been properly accounted; and that goods removed through delivery notes in the guise of "goods not for sale/sent for processing" were not at all returned which proved that there was illicit removal. The items like beverage tins have been sent for melting to other factories and receipt/clearance of resultant articles from such melted pieces had not been identified. The waste generated within the factory as well as in job workers premises had been removed periodically without payment of duty and in contravention of Rules. The difference in quantities noticed between 'OK' numbers in finished production and Inspection reports and the quantities entered in RG 1 register correspondingly, had been removed illicitly, in as much as the 'OK' numbers were exclusive of rejects/defective pieces. The manufactured goods had been accumulated and kept without any accounts with an intention to clear the same without payment of duty. In as much as the assessee had suppressed the production and clandestinely cleared the goods without payment of duty, proviso to Section 11A of Central Excise and Salt Act, 1944 appeared to be invokable in this case.
12. In view of the foregoing facts, it appeared that the assessee have contravened the provisions of Rules 9(1), 52A, 53,173B, 173C, 173G, 226 and 57F(2)/(3) of Central Excise Rules, 1944 and punishable under Rules 9(2), 52A, 173Q and 226 of Central Excise Rules, 1944. The unaccounted seized goods valued at Rs. 4,17,740.00 deposited with the assessee are also liable for confiscation under Rule 9(2), 52A, 173Q and 226 ibid and they are liable to pay the duty on the excisable goods cleared without payment of duty and without following Central Excise Procedures valued at Rs. 88,83,301.00 involving a duty amount of Rs. 18,33,502.00 during the year 1992-93 to 1994-95."
3. Appellants have challenged the correctness of the demand raised including the seizure and imposition of penalty by outrightly denying the charge that they have removed the goods clandestinely. Their contention was that they had removed the items under Rule 57F(2) and all the documents had been prepared and there was no discrepancy in any of the RG-1 entries or shortage of the items alleged by the Department. They relied upon the large number of seized records and also produced various records during the personal hearing and challenged various allegations brought out in the show cause notice. The Commissioner before passing the impugned order got their claim verified through his officers and in para 27 he has recorded that he has found to some extent their contention of quantification to be correct and thereafter gave a finding that the amount is required to be confirmed for Rs. 11,18,152 as against the demand of Rs. 18,33,502 as mentioned in the Annexure to the show cause notice. However, the appellants questioned this working out. They have seriously challenged the findings arrived at by the Commissioner in para 28 of his order that their claim cannot be accepted as all the documents have been produced only as an after thought as all the documents are not genuine. On the same premises in para 29 to 31 he has refused to accept their contention with regard to the veracity of the private records maintained by them and rejected their plea with regard to the veracity of the documents produced by them. Their contention that there was no clandestine removal nor the records have been properly maintained nor the goods have been removed without payment of duty and the allegations that the final goods were removed under Rule 57F(2) were not challenged at the time of hearing of the stay petition. Their contention was earlier accepted regarding the plea of violation of principles of natural justice and after directing them to pre-deposit Rs. 4 lakhs, waiver of pre-deposit of the balance amount was given. At the same time direction was given by this Bench to the Department to verify all the documents furnished by the appellants and file a detailed report pertaining to the same. The department has carried out the exercise of verifying the documents furnished by the assessee along with the reply to the show cause notice. Thereafter the detailed report has been filed by the Department which comprises of 11 + 9 pages.
4. Arguing for the appellants, Shri V. Sreedharan pointed out that there was no reason at all for the Commissioner to have rejected the seized documents produced during the time of hearing on verification on the ground that the same are not genuine and have been produced as an afterthought. It is his contention mat it is violative of the principles of natural justice. All the documents had been verified. However, the Commissioner has held that they were not produced at the time of investigation is not correct. The appellants are getting orders from various customers and were maintaining proper and correct details of all the receipts giving all the details under Rule 57F(2) & (3) and non-examination of their documents and non-verification has resulted in serious injustice and no duty liability would arise if proper scrutiny of the documents is carried out and accepted. It is their further contention that even while rejecting the claim the Commissioner has reduced the claim to Rs. 11 lakhs that as held by them. He submitted that there cannot be any demand of duty in respect of the goods which are lying within the factory premises and which were seized. He has taken various pleas and synopsis and submitted that as the Department had at the instance of the Bench carried out the verification and there is a detailed report, the matter may be scrutinised by the Bench and their pleas accepted in the light of the report filed, and the proceedings dropped.
5. This plea is opposed by the learned DR for the Revenue that the Bench cannot exercise the original jurisdiction. Although the Commissioner had reasons to reject the plea on examination of the documents, however at the instance of the Bench direction verification of the documents was carried out and the report has been filed. The report itself is clear and based on which the claim has been rejected. Therefore the matter can be adjudicated in terms of the report filed.
6. On consideration of the submissions made, we notice that the points made by the learned Counsel has got force and require consideration. Appellants have seriously challenged the allegation of clandestine removal and their contention is that all the goods were removed under challans and the challans bear details of the goods removed under Rule 57F(2).while this is disputed by the Commissioner in his findings. However while so, he has refused to look into the seized documents and has given a finding that the records have been produced only at the time of personal hearing and not during time of investigation and as a result the production of records is an 'after thought'. We are not in a position to accept this plea because the Commissioner ought to have scrutinised and seen the entries in each of the records and given the findings as to how the entries in the documents are not acceptable. Once the documents have been maintained, whether they are genuine or not should have been rejected only after due verification. Merely because the appellants have produced the same at the time of personal hearing, that by itself will not be a ground for rejection of the documents. In view of the fact that the Commissioner is the original authority he should get full details verified in terms of the Act and adjudicate the same. The Department has carried out the verification at the instance of the Bench and detailed verification of the records was carried out and the departmental officer has filed a report. The report has two portions, the first portion contains 11 pages and the second portion comprises of 10 pages. A plea has been made that Bench may scrutinise the records and give a finding. We are not in a position to accept this plea of the learned Counsel. The original authority is required to examine the records in the presence of the party and the Revenue's representative. Both have to sit jointly and carry out the verification. The appellants are entitled to file report or reply to the verification of the documents before the Commissioner. It is for the Commissioner to carry out this exercise and give a finding taking into consideration of the pleas raised by the defence to arrive at a just and correct conclusion on the pleas raised by the appellants against the allegations brought by the Department in the show cause notice. We accept the plea that there was violation of the principles of natural justice. We are therefore of the considered opinion that the impugned order is required to be set side and the matter to be remanded for de novo consideration. We order accordingly. The Commissioner shall have all the records verified before the hearing them. At this stage, the learned DR prays for a direction by the Tribunal that the pre-deposit which is already made should not be returned to the appellants till the adjudication of the case to safeguard the interests of the Revenue. The Counsels Shri V. Sreedharan along with Shri Sankararaman who are present in the Court submit that this prayer is required to be rejected as, as per law it is their right to have the deposit returned and the learned Counsels pray for a direction to the authorities to return the amounts. We are of the view that the Commissioner shall deal with this aspect of the matter in terms of Section 35F of the CE Act, 1944. The DR prays for a direction to the lower authority for expeditious disposal of the matter as the matter is old. The Commissioner is directed to dispose of the matter as expeditiously as possible.