Customs, Excise and Gold Tribunal - Delhi
Raj Sandeep Co. vs Collector Of C. Ex. And Cus. on 20 November, 1998
Equivalent citations: 2003(162)ELT1028(TRI-DEL)
ORDER A.C.C. Unni, Member (J)
1. These two Appeals arising from the common Order-in-Original passed by the Collector of Central Excise, Chandigarh dated 31-1-92 were heard together. By the said order, the Collector had confirmed a duty of Rs. 13,91,148.65 against the appellant M/s. Raj & Sandeep Co. Ltd., Ludhiana and imposed a penalty of Rs. 4 lakhs on them apart from directing payment of redemption fine of Rs. 25,000/- for release of the confiscated goods.
2. We have heard Shri Harbans Singh, ld. Advocate for the appellants and Shri P.K. Jain, ld. DR for the Department.
3. Ld. Counsel Shri Harbans Singh contended that the case relates to allegation of clandestine production and removal of M.S. Steel Ingots weighing 12.780 M.T. seized from a truck on 29-12-90. Consequent on the said seizure and further investigation, the Collector by SCN dated 19-6-91 asked the appellants to explain why the seized goods should not be confiscated and why duty amounting to Rs. 14,34,533.50 on suppressed production of 2508.317 M.Ts. of Steel Ingots and other rolled products clandestinely removed by the appellants during the period 1-1-88 to 29-12-90 should not be recovered and the extended period should not be invoked under Section 11A of the Central Excise Act. The SCN had placed reliance on the statements given by Shri K.K. Chopra, Manager of the appellant's firm, Shri Raj Deep Jain, Director thereof, Shri Raj Singh, Driver of the Truck and Shri Om Prakash, Proprietor of M/s. Hanuman Das, the alleged consignee of the goods as also the note book recovered from the truck and the records of octroi posts at Mandi Gobindgarh and Jullundar through which the trucks carrying the consignments of steel ingots despatched by the appellants had passed. Ld. Counsel submitted that both at the time of replying to the SCN as well as at the time of adjudication proceedings before the Collector, the appellants had contested the allegations. At the time of personal hearing before the Collector attention was drawn to the contradictory nature of the statements given by Shri Raj Singh, Driver of the truck from which the goods were seized. Whereas in his first statement Shri Raj Singh has stated that he was working as driver with M/s. Raj & Sandeep Co. Ltd. (the appellant) for the last 20 days and the truck was owned by the appellants, towards the end of the said statement dated 29-12-90 he had stated that he was working with the appellant for the last two years. The driver had also in his subsequent statement dated 8-1-91 stated that Truck No. JKC-7373 was owned by his father, Shri Gian Singh and not by M/s. Raj & Sandeep Co. Ltd. He had also admitted that his statement of 29-12-90 was false to that extent. Further, Shri Raj Singh had also stated on 8-1-91 that payments had been received only in respect of crossed entries in the note book maintained by him, but later in his statement dated 7-6-91, he had stated that payments had been received in respect of all the entries made in the note book. Ld. Counsel contended that the statements given by Shri Raj Singh, Driver could not be relied upon since they are mutually contradictory. As regards reliance placed on the records of octroi posts, ld. Counsel submitted that the appellants were not allowed to examine the said receipts nor could the appellants investigate or verify the contents thereof. The said receipts contained only the registration of trucks which passed through the octroi posts. They did not contain any reference to the name of the consignor or the consignee of the said consignments. These entries therefore, do not establish any connection between the appellants and the consignments. Ld. Counsel also submitted the fact that the octroi receipts containing the registration number of trucks which had been used by the appellants for transportation of their goods mentioned payment of Central Excise Duty, would, on the other hand, show that whenever they had cleared the goods from their factory, they had paid the duty leviable thereon. Further, the Department had not been able to establish whether any of the goods alleged to have been clandestinely cleared had been received by the consignees. Ld. Counsel further submitted that the allegation made about double clearance on the same gate pass was untenable. Ld. Counsel submitted that it was farfetched and impractical for any manufacturer to mention the same weight of ingots on the gate passes again and again. In this connection, he referred to the Annexures A to D of the SCN in which the weight of the alleged second consignment was invariably shown to be the same as the first consignment. As far as the entries in the Note Book maintained by the driver of the truck for alleging double clearance was concerned, it was submitted that the goods were cleared from the factory only after due accountal. However, it was possible that since payment for freight was made on consignment basis, the driver might be making excess entries to over-charge the consignment. Even if it is assumed that the goods had been cleared without accountal and payment of duty as detailed in Annexure E to the SCN, the same should have been reflected in the octroi receipts. Further, out of 33 entries of alleged double consignments in the driver's note book mentioned in Annexure A to the SCN, octroi receipts had been recovered only for 14 entries. For the balance 19 entries, no octroi receipts had been recovered. Reliance was placed on the Tribunal decision in Kashmir Vanaspati Ltd. v. Collector of Central Excise [1989 (39) E.L.T. 655]. Ld. Counsel further argued that the duty demand raised against the appellant based on the note book maintained by the driver of the truck cannot be conclusive proof to indicate that all the entries therein pertained to the appellant. As regards the seizure of 12.780 m.t. of Steel Ingots seized from the truck on 29-12-90, ld. Counsel submitted that the Manager of the factory Shri K.K. Chopra had stated in his statement on the same day (29-12-90) that the steel ingots were taken away by the driver by mistake without the cover of any gate pass when Shri Chopra was away in Ludhiana. On realising the mistake Shri Chopra had himself voluntarily debited the duty vide PLA Entry No. 910 dated 29-12-90. The said statement of Shri Chopra was corroborated by the fact that the Central Excise Officers on physical verification had found the same quantity of Steel Ingots short in the balance recorded in the R.G.I Register. Further, while considering the submissions made on behalf of the appellants, the Collector had also failed to take note of the fact that out of 4 trucks belonging to the appellant company two had been transferred to Alwar (Rajasthan) in 1981. The said vehicles were re-registered in Rajasthan and they bore Rajasthan Registration Nos. No duty liability can, therefore, be demanded on the basis of the entries relating to all the four trucks. Ld. Counsel also drew attention to Section 36B of the Central Excise Act relating to the evidentiary value of documents reproduced through electronic data processing. He submitted that the evidentiary value of such documents was subject to safeguards provided in the law which have not been followed. Therefore, no reliance could be placed on the photo copies of the octroi receipts produced by the Department. He also drew attention to the fact that though the Department had relied heavily on octroi receipts, in none of the statements of the Directors, or officers of the appellant's company any explanation relating to the said entries or in the note book maintained by the driver had been sought. He also emphasises the fact that no discrepancy in the R.G.I account, raw material account or R.T. 12 returns had been found or alleged by the Department nor has the Department been able to show any excess consumption of electricity for the alleged clandestine production of the M.S. Steel Ingots manufactured by the appellant. Ld. Counsel therefore, contended that the entire basis of the SCN and the findings in the impugned order are based on surmises and inadmissible evidence. Since the Department has not been able to substantiate any of the allegations contained in the SCN and therefore, the impugned order may be set aside.
4. Ld. SDR Shri P.K. Jain relied on and reiterated the findings of the Collector in the impugned order and prayed for dismissal of the Appeal.
5. We have considered the submissions. We find that the Collector has relied on the statement of driver Shri Raj Singh dated 29-12-90 in support of the finding that double consignments had been made on single excise gate passes. The explanation given on behalf of the appellants that such a practice is farfetched and impractical does not appear to be convincing since there is nothing farfetched or impractical in mentioning the same quantity twice under cover of a single gate pass. Ld. Collector had also relied on the entries in the note book maintained by the driver to show that the quantities of ingots mentioned therein relate to dispatches from the appellants' factory. He had also, observed that 19 double entries for which no octroi receipts were available, the entries for the two consignments were of equal weight and bore the same dates. The Collector had observed that the same modus operandi had been adopted by the appellants in respect of 13 other cases out of 14 for which octroi receipts were available showing two consignments of equal weight in each case in which also the consignments were despatched on the same day under cover of only one gate pass. As regards the claim of the appellants that the octroi receipts did not bear the name of the appellants as the consignor and did not indicate any bill numbers. Collector has observed that though it may not be possible to rely on any direct evidence of production and clearance of goods clandestinely, in the facts of the case, the note book maintained by the driver and the octroi receipts would show that the goods removed clandestinely had been transported from the factory premises of the appellants and the octroi receipts also show entry of the goods in Mandi Gobindgarh and Jalandhar. As regards the argument there were contradictions in the various statements given by the driver Shri Raj Singh, the contradiction relating to the duration of service with the appellants and in relation to receipt of payments in respect of entries in the note book. Collector had held that there were not of such a serious nature as to impinge upon the reliability of the entire version given by the driver. Further, the deposition of Shri Raj Singh regarding clandestine removals were supported by the octroi receipts showing the transportation of goods. As regards the transfer of two trucks to Rajasthan and reference of the said trucks in the octroi receipts on two occasions after the registration of the said vehicles in Rajasthan, Collector had dismissed this as a case of oversight. Collector had relied on the Hon'ble Supreme Court decision in Collector of Customs v. D. Bhoormal [1983 (13) E.L.T. 1546] to emphasise the fact that in smuggling or clandestine removal cases, it was not necessary to prove the prosecution case with mathematical precision.
6. On a perusal of the impugned order and after considering the submissions made on behalf of the appellants, we are of the view that though the material relied upon by the Department do give rise to suspicion about the appellants' conduct, we are of the view that the material relied on by the Collector like the entries in the Note Book of the driver and the octroi receipts do not establish sufficient nexus to establish the charge of clandestine removal against the appellants. In the above view of the matter, we are inclined to give the appellants the benefit of doubt. As had been stated by the Apex Court in State of Punjab v. Bhajan Singh (AIR 1975 S.C. 258) suspicion however strong, cannot be a substitute for proof.
7. These Appeals are accordingly allowed after setting aside the impugned order with consequential relief to the appellants.