Customs, Excise and Gold Tribunal - Delhi
Pahwa Chemicals Pvt. Ltd. vs Commissioner Of C. Ex., Delhi-Ii on 22 February, 2002
Equivalent citations: 2002(142)ELT106(TRI-DEL)
ORDER P.S. Bajaj, Member (J)
1. This appeal has been preferred by the appellants against the impugned order-in-original dated 27-7-2001 passed by the Commissioner of Central Excise vide which he had affirmed duty demand of Rs. 38,43,473/- with equal amount of penalty for the period April, 93 to March, 98.
2. The appellants are engaged in the manufacture of textile printing adhesive falling under Chapter Heading 3402 of CETA. On 24-6-98, the preventive staff of the Central Excise, visited their premises. On checking the goods lying in the bonded warehouse; it revealed that the textile printing adhesive packed in plastic jars was being sold by them to the customers after affixing of paper labels. The perusal of those labels also showed that they were clearing the goods after affixing of foreign brand name ATR and had technical collaboration with M/s. TR St. Moritz Ag. Switzerland. The statement of Jasbir Singh, Manager of the appellants was also recorded wherein he admitted that they were sticking paper labels on the goods bearing foreign name ATR. This very fact was also admitted by Shri S.S. Pahwa, in his statement recorded on 14-9-98 who even further stated that they were affixing such labels on their products since 1983 as they had technical collaboration with ATR St. Moritz AG Switzerland and that no other person could use this logo during the validity of their agreement with the said company which was effective up to February, 1989. On completion of the investigation, show cause notice dated 14-12-98 was issued to the appellants alleging that they were not entitled to the benefit of small scale exemption Notification No. 1/93 (as amended) and Notification No. 16/97 as they were clearing the goods under the brand name of another person. The appellants, however, contested the correctness of that notice. They denied the use of brand name of any other party on their products and maintained the demand was time barred and they were not liable to pay duty of Rs. 39,49,111/- as demanded through the show cause notice and that the extended period of limitation could not be invoked. The Commissioner who adjudicated that show cause notice did not accept the version of the appellants and confirmed the duty demand after denying the benefit of SSI exemption notification vide order dated 22-4-99. The appellants, however, challenged that order before the Tribunal. The Tribunal vide order dated 17-10-2000 [2001 (138) E.L.T. 477 (T)] agreed with the findings of the adjudicating authority that benefit of exemption Notification No. 1/93, dated 28-2-93 (as amended) and Notification No. 16/97, dated 4-7-97 (as amended) was not available to the appellants, as they had used the brand name of another person. However, on the question of limitation, the Tribunal remanded the matter for re-adjudication as the appellants requested for production of additional evidence.
3. After remand, the Commissioner through the impugned order had affirmed the duty demand in addition to penalty of equal amount as detailed above, payable with interest.
4. The learned Counsel has contended that the longer period of limitation under proviso to Section 11A(1) of the Act could not be invoked for confirming the duty demand for the period April, 93 to March, 98 on the strength of show cause notice dated 14-12-98, as the excise department had full knowledge that the appellants were manufacturing and clearing the goods (textile printing adhesive) by using the brand name of another person since 1983. To prove such knowledge, the Counsel has relied upon these facts (i) Sector as well as range officer carried out verification to satisfy themselves about the appellant's claim of SSJ exemption notification before approving their classification lists; (ii) earlier 9 demand notices were issued and adjudications in respect thereof were made on account of classification dispute between the appellants and the department; (iii) central excise preventive officers intercepted in transit the appellant's six consignments which carried labels of alleged foreign brand name and drew the sample of six varieties on 31-10-91; (iv) during the relevant period, the central excise officers repeatedly visited the appellant's factory and carried out stock challenges of each variety on their products and found that stock tallied with the statutory record; and (v) all the RT-12 returns filed alongwith GPIs and invoices containing description of the goods during the disputed period were approved by the department.
But in our view, from these facts it is difficult to legally hold that there was no suppression of true facts by the appellants regarding using of brand name of another person while availing the benefit of SSI exemption Notification Nos. 1/93 and 16/97. In none of the classification lists filed by the appellants during the period in dispute, for the verification of which the officers of the central excise are alleged to had visited their factory premises in terms of check list (page 83), the appellants disclosed that they were using the brand name of another person. They themselves had obviously suppressed the fact of using brand name of another person from the department. They were required to state in clear terms that they were not using the brand name of another person on their products and as such, they were entitled to the benefit of exemption notification. The fact of using the brand name of another person, in the present appeal, cannot be denied by them as the Tribunal had already giving findings against them while disposing of their earlier appeal vide order dated 17-10-2000. No doubt, the appeal of the appellants against that order of the Tribunal is pending before the Hon'ble Supreme Court and the operation of that order had not been stayed.
5. Similarly, earlier demand notices alleged by the appellants (9 in number) were issued to them on account of classification dispute of the products manufactured by them. In reply to those notices, they never averred that they were using the brand name of another person. There is nothing on the record to suggest that interception of six consignments of the appellants was made on 30-10-90 on the ground that these were being cleared under the brand name of another person. Samples were also not taken on that ground from those consignments. The samples were got tested only to ascertain the composition of the products of the appellants and their proper classification for the purpose of duty payable thereon. It is not the case of the appellants that they, at that time, disclosed to the department that they were using the brand name of another person. Even at the time of visit by the excise officers for stock verification, there is nothing on the record to suggest if the appellants disclosed the use of brand name of another person by them. In RT 12 returns, the appellants never disclosed that they were affixing labels carrying brand name of another person on their goods. They are now still disputing of having used the brand name of another person and that is why they had questioned the validity of the final order dated 17-10-2000 before the Apex Court vide which the Tribunal has recorded the findings against them of having used the brand name of another person. Therefore, the suppression of this material fact regarding user of brand name of another person in the manufacture of their products, by the appellants is quite apparent. By suppressing this material fact, they had wrongly availed the benefit of SSI exemption Notification Nos. 1/93 and 16/97, referred to above and thereby evaded duty of the disputed amount during the period in question. The ratio of law laid down in Flender Mecniell Gears Ltd. v. CCE., Calcutta - 2001 (127) E.L.T, 582 and Jagriti Industries v. CCE, Aurangabad - 2001 (127) E.L.T. 841, referred by the Counsel, wherein it has been observed that extended period is not invocable on account of knowledge, is not of any help to the appellants in view of the larger Bench decision of the Tribunal in Nizam Sugar Factory v. CCE, Hyderabad 1999 (114) E.L.T. 429 wherein it has been observed that acquiring knowledge by the department did not take away the extended period of limitation provided by the law maker in the Act when there was suppression, fraud and collusion exercised by the assessee on the department with intent to evade payment of duty.
6. The other grounds pressed into service by the Counsel for non-applicability of the extended period of limitation in the case of the appellants, are these (i) there was no positive mis-declaration of any fact on the part of the appellants, (ii) even there is no provision under the Central Excise law casting duty on the appellants to disclose that he was using the brand name of another person; (ii) they remained under the impression/belief that benefit of SSI exemption notifications was available to them if they were using trade mark of a foreign manufacturer, which was more prominent than of another person, on their product; (iv) SSI exemption benefit can not be denied as the appellants are exclusive owners of the brand name of foreign company and are using the same under an agreement with that company and that none else can use that brand name.
7. To substantiate the first ground, the Counsel has referred to Board's Circular No. 312/2897-CX, da.ted 22-4-97 wherein the Board has, after following the Apex Court observations, in the case of Padmani Products and Chemphar Drugs, that there should be positive mis-declaration for invoking the extended period of limitation. But this circular is not of much help to the appellants. The positive mis-declaration on the part of the appellants was there, in the instant case, as they in their classification lists, RT-12 returns and other declarations did not disclose the user of brand name of another person in the manufacture of their product. They were duty bound to make positive declaration regarding exact trade mark which was being used by them on their product, but did not do so wilfully just with the sole object of availing benefit of SSI exemption notifications. They knew that if they made correct declaration and disclosed about the user of brand name of another person on their product, they would not be entitled to SSI exemption benefit and will have to pay duty on the clearances. The ratio of law laid down in Amrit Protein Ltd. v. CCE -1995 (80) E.L.T. 856, referred to by the Counsel wherein it has been observed that claiming of exemption does not amount to mis-declaration, is not attracted to the facts of the case of the appellants, in the light of the observations made above. Similarly, law laid down in Steel Authority of India Limited v. Commissioner of Customs, Sheva - 2001 (134) E.L.T. 397 (T) = 2001 (46) RLT 713 and Balsam Extrusions Pvt. Ltd. v. Collector of Central Excise & Customs, Surat-II-2001 (131) E.L.T. 586 (T) = 2001 (45) RLT 722, is not attracted to the facts of the present case. In the first case, the fact of availment of Modvat credit was allegedly/deliberately suppressed as in the shipping bills, but no such declaration was made and for that reason the Tribunal observed that extended period under Section 28 of the Customs Act, could not be invoked. In the second case, the omission was the non-declaration of a fact which the law did not require to be declared and for that reason, the extended period was held to be non-invocable, by the Tribunal. But in the case in hand, as observed above, the appellants were duty bound to disclose the brand name which was being used by them on their products, otherwise they could not avail benefit of SSI exemption notification. Therefore, the extended period had been rightly invoked against the appellants in the present case.
8. It had never been the case of the appellants that they were labouring under the mistaken belief in view of the conflicting legal position that benefit of SSI exemption notification could be availed even by using the brand name of another person, prior to the pronouncement of the larger bench's verdict in Namtech Systems Ltd. v. CCE, New Delhi - 2000 (115) E.L.T. 238. No such plea was ever taken by them before the adjudicating authority. Moreover, their plea is that they had not used the brand name of another person and as such, the question of their labouring under the mistaken belief for availing benefit of SSI exemption notification, did not arise.
9. The question as to whether the appellants had used the brand name of another person and are entitled to the benefit of SSI exemption notification, cannot be gone into by us in the present appeal. The Tribunal had already decided this question against the appellants. The appellants had challenged that order of the Tribunal before the Apex Court where their SLP is stated to be pending.
10. Lastly, the learned Counsel has contended that joint penalty under Section 11AC, Rule 173Q and erstwhile Rule 9(2) of the Rules, could not be imposed by the adjudicating authority, in view of the law laid down in Punjab Recorder Ltd. v. CCE, Chandigarh - 2001 (132) E.L.T. 41 and Monica Electronics Limited & Ors. v. CCE, New Delhi - 2001 (134) E.L.T. 454 (T) - 2001 (77) ECC 446. But in our view, this argument of the Counsel also cannot be sustained. Penalty had been imposed mainly under Section 11AC equal to the amount of duty on the appellants and the provisions of that section has been read with Rule 173Q and erstwhile Rule 9(2) of the Rules. For part of the period starting from September, 96 onwards, when this section came into force, and for the period earlier to that, penalty could be imposed under the above referred section and the rules, The ratio of law laid down in the above referred cases, is not attracted to the case of the appellants.
11. Non-payment of duty by the appellants during the period in question, remains an undisputed fact. Their plea that they are entitled to the benefit of SSI exemption Notification Nos. 1/93 and 16/97 cannot be accepted as the Tribunal had already rejected their plea vide final order dated 17-10-2000. The appeal of the appellants against that order is no doubt stated to be pending before the Apex Court but the operation of that order while admitting the appeal of the appellants was not put in abeyance by the Apex Court. Therefore, the appellants are liable to pay the disputed amount of duty and penalty as confirmed against them by the adjudicating authority. The half-hearted argument of the Counsel that since no penally had been imposed on any employee of the company, so penalty could not be imposed on [he appellants, is mis-conceived and cannot be accepted as it was not mandatory for the adjudicating authority to impose penalty on the employee also.
12. In view of the discussions made above, we do not find any illegality in the impugned order of the adjudicating authority and as such, the same is upheld, The appeal of the appellants is accordingly ordered to be dismissed.