Customs, Excise and Gold Tribunal - Tamil Nadu
Premier Matches vs Collector Of Customs on 19 July, 1990
Equivalent citations: 1991(51)ELT377(TRI-CHENNAI)
ORDER S. Kalyanam, Member (J)
1. The above Miscellaneous Applications have been filed for early hearing of the appeals. Since the appeals have already been taken up for hearing, the above applications are dismissed.
2. The aforesaid stay applications arising out of the common impugned order of the Collector of Central Excise, Madurai dated 24-12-1987, have been filed for waiver of pre-deposit of duty of Rs. 51,037.50 and a penalty of Rs. 1500/- on petitioner M/s. Arul Match Works and Rs. 5000/- on petitioner M/s. Premier Matches under the provisions of the Central Excise Rules, 1944.
3. Shri Shivaji, the Learned counsel for the petitioners submits that in respect of the same units in pursuance of an order of adjudication came to be passed on 12-3- 1987 which has been appealed against before this Tribunal and the appeals numbered as E/285, 286, 287 and 288/87 are pending. In those appeals the petitioners took out an application for waiver of pre-deposit of duty of Rs. 4,70,450.40 and the Tribunal by its order dated 27-7-1987 in S/Order No. 227/1987 directed the petitioner M/s. Premier Matches, to make a pre-deposit of Rs. 1 lakh by 30-9-1987 and the amount was deposited. The learned counsel urged that subsequent to the said impugned order the petitioner's factory was closed in June 1987 and remains closed till date and no operation is going on and the licence has also been cancelled. The learned counsel therefore, prayed for waiver of pre-deposit of duty and penalty in the above circumstances.
4. Shri P.B. Vedantham, the learned D.R. submits that he has no instructions in respect of the petitioner's financial position.
5. We have considered the submissions made before us. Taking into consideration the fact that the petitioner unit remains closed and the licence has also been cancelled and keeping in mind that M/s. Premier Matches have already paid Rs. 1 lakh as pre-deposit pursuant to the order of the Tribunal cited supra, we grant waiver of predeposit of the duty and penalty in the abovementioned stay petitions and take up the appeals to-day along with other connected appeals as the impugned orders relate to the same parties and arc common in all cases.
6. For the purpose of covenience we shall now take up Excise Appeal Nos. 285 to 288/1987 relating to M/s. Premier Matches, Arul Match Works, Sudar Match Works and Sri Venkatesa Match Works. These above appeals are directed against the order of the Collector of Central Excise, Madurai dated 12-3-1987 wherein inter alia he has found that M/s. Premier Matches are not entitled to any concessional rate of duty under Notification No. 22/82 and clearances of matches and the entire manufacturing activity has taken place only in Premier Matches and the other match factories did not manufacture and clear matches. On 30-12-1985 the Supdt. of Central Excise visited the premises of the above match factories and all these match factories are in the same compound and one Shri Manoharan is the proprietor of Premier Matches who has been nominated the power of attorney by the other match units. The said Manoharan was managing all the units and was maintaining the records. The Inspecting Authorities on 30-12-1985 in- dicated that in Arum Match Factory the oven, hot plate, levelling plate and dipping plate were covered with dust and did not show any sign of usage and the dipping plate in particular did not show a trace of usage for a long time. The authorities also found the pits for storing the raw materials were covered with dust and the store-room also was filled with wooden acticles. The authorities also found more or less similar features in the other match units and, therefore, had reason to believe that the entire manufacturing activity was carried on by only M/s. Premier Matches and the other match units were merely dummy for Premier Matches and only for the purpose of availing the concessional benefit of Notfn. 22/82, it was made to appear as if matches were manufactured in the other units and cleared. The accounts and registers meant for accountal of chlorate, sulphur, dipped splints and the wages register were not produced before the authorities to make any verification. The R.G.I register was produced which on verification with the floor stock, was found to tally with 500 gr. of matches found at the factory at the time of check. The authorities having reason to believe that manufacturing activity was carried on in contravention of law effected seizure of the 500 gr. of 50s Matches found at the factory under a mahazar attested by witnesses. The Accountant of Sri Venkatesa Match Works namely, Shri S. Chinnasamy was present. Based on the facts brought out in the respective mahazar drawn at each of the match units the authorities interrogated the lecensees of the four units and recorded evidence tendered by Shri Manoharan. Shri Manoharan asserted that all the four match units are represented by him as power of attorney and are having essential equipment for independent production of matches and stated that dayto-day account showing payment of wages to labourers and receipt of raw materials were not maintained as wages to the labourers were settled then and there. The authorities issued a show cause notice dated 26-6-1986 inter alia calling upon the appellants of Premier Matches as to why the benefit of Notfn. No. 22/82 for the financial year 1985-86 be not denied and as stated therein why the differential duty in respect of the matches cleared from 1-4-85 to 7-5-85 and also for the period 8-4-85 to 31-3-86 should not be demanded at the regular rate in terms of Rule 9 (2) of the Central Excise Rules, 1944 read with Section 11A of the Central Excises & Salt Act, 1944. Show cause notices were also issued to the other match units alleging contravention of the Rules for levying penalty.
7. The learned counsel for the appellant primarily contended that the main charge of the Department against the appellants is that manufacturing activity did not take place in other match units except Premier Matches and, therefore, whatever had been found manufactured was manufactured only by Premier Matches and the other units are merely dummy units for the purpose of erroneously availing the benefit of concessional assessment in terms of the notification cited supra. The learned counsel urged that there is absolutely no evidence, either direct or circumstantial, to sustain the charges or allegation of the Department that the other units are dummy units of Premier Matches. It was contended that prior to the date of inspection and also subsequent to the date of inspection periodical visits by Inspectors have been made by the authorities and the entries have been made in all the statutory registers such as the R.G. 3 and gate passes for the clearance of the matches from the various units. When the authorities themselves have visited the factories and inspected on various dates and certified the manufacture and clearance of matches from each of the units in various statutory registers, it would only prove and establish that manufacturing activity was going on in all the units. Even Shri Manoharan, the power of attorney has only asserted even at theing matches. The learned counsel also urged that even the mahazar witnesses deposed that they did not see the equipment but merely signed the mahazar at the request of the officers. The learned counsel also placed reliance on the ratio of the ruling of the Bench in the case of 'Moorthy Match Works and Ashok Match Works v. Collector of Central Excise' covered by Order No. 120/88 dated 22-3-1988; in more or less similar situation the Tribunal, in the absence of clinching circumstantial evidence and in the absence of any other direct evidence, has found that the benefit of doubt should go to the appellant.
8. Heard Shri P.B. Vedantham, the learned D.R.
9. We have considered the submissions made before us and also gone through the records. The important question that arises for consideration in the present case is whether the gravamen of the charge that there was no manufacturing activity at all in the other match units except Premier Matches for the reasons stated in the show cause notice and in the impugned order, is sustainable on the evidence available on record. At the outset we would like to state that the entire case rests only on circumstantial evidence and there is no direct evidence by way of statement having been recorded from any person. The statement recorded from Shri Manoharan, the power of attorney of the other units and proprietor of Premier Matches is exculpatory in nature. Even the Accountant Chinnaswamy who admittedly was present, was not even examined and no statement was recorded from him. The Adjudicating authority has merely relied upon certain circumstances dealt in paras 16 to 23 of the order. During the course of hearing the learned counsel for the appellant produced extracts of the statutory registers duly signed by the Central Excise authorities in regard to the issue of gate passes and the register relating to the clearances of matches allowed under the Physical Control Scheme and also the R.G. 3 register evidencing clearances made before and after the date of inspection at periodical intervals. This aspect was put to the learned D.R. who, after due verification, accepted that such clearances were allowed from the various match units by the authorities, as evidenced by the statutory registers. The extracts of these registers have also been filed by the appellants and form part of the records. To avoid duplication we are not verbatim reproducing the same, since the Department is not disputing the fact that the extracts represent the entries in the statutory registers duly signed by departmental authorities periodically relating to the clearances from the appellant's factories. Therefore, when the statutory authorities themselves in the statutory registers have put their signature evidencing clearance of goods manufactured from each of the units, the case of the Department that no manufacturing activity at all could have taken place in the units other than Premier Matches, is not acceptable. Matches are under physical control and the appellants could not have cleared the matches on various dates purporting to be clearances from each of the units with the blessings of the authorities systematically covering almost the entire period. There is also nothing on record to show that during the aforesaid period during the visit of any of the authorities the appellants were not manufacturing matches. This important circumstance would militate against the version of the Department set out in the show cause notice and also the discussions in the impugned order. We are also at a loss to understand as to why the various departmental authorities who have systematically inspected the various statutory registers and permitted clearance of matches from each of the unit, were not even contacted during investigation nor statements recorded from them with reference to the entries in the statutory registers. If we are to uphold the charge in the show cause notice it would logically imply that the various purported visits of the authorities are all false or that there was an active collusion in the matter of clearances of matches between the authorities and the appellants. No such stand has been taken by the Department nor any plea advanced before us in that regard. We are also not able to appreciate as to why that during investigation no statement from any of the worker was recorded at all. As stated above the entire charge of the Department is sought to be proved merely on the basis of certain circumstantial evidence which also stand disproved by the very evidence in the form of statutory registers signed by the departmental authorities themselves. At any rate we would like to note that no statement was recorded from the suppliers of the raw materials or from the buyers of the matches from the units to ascertain as to whether the dealings or the supply of the raw materials of the parties was with one unit or they were in fact having trading in units in the other units also. The proceedings being penal in nature, the circumstantial evidence not being inconsistent or incompatible with the innocence of the persons charged with the contraventions of the Act, we are inclined to give the benefit of doubt, following the ratio of the Bench ruling in the case of 'Moorthy Match WorkslAshok Match Works' cited supra. Therefore, we set aside the impugned order dated 12-3-1987 and allow the appeals (E/Appeal/Nos. 285,286,287 and 288/87-MAS.).
10. Appeal Nos. E/364 and 365/88. - The charges and the evidence in the above two appeals are also more or less similar to the charges in the other appeals mentioned above and in these cases also except that the period involved in the above appeals is April 1983 to December 1986, the nature of evidence collected being same, we follow the reasoning given above in the other appeals and by giving the benefit of doubt to the appellants herein also we set aside the impugned order dated 24-12-1987.
11. In the result all the appeals are allowed.
V.P. Gulati, Member (T) Before parting with the case I would like to observe that the Departmental authorities have been remiss in not carrying out in-depth investigation. No effort has been made to gather evidence in regard to the manufacture of matches in other units by recording statements from the workers, accountant etc. as also from the suppliers of the raw materials, buyers and to get at the people who were actually concerned with the manufacture and marketing of goods. Omission to do so leaves much to be desired so far as the capability of the field staff to conduct proper investigation and the supervision of such investigations, is concerned.