Customs, Excise and Gold Tribunal - Tamil Nadu
Tamilnadu Fasteners vs Cce on 30 August, 1996
Equivalent citations: 1997(68)ECR138(TRI.-CHENNAI)
ORDER S. Kalyanam, Member (J)
1. The above appeal is directed against the order of the Collector of Central Excise, Madras, dated 14.1.1988 levying a duty of Rs. 1,64,464.18 and penalty of Rs. 60,900/- on the appellant under the provisions of the Central Excises and Salt Act 1944, the Act for short.
2. Central Excise authorities visited the appellant's firm on 8.1.1986 and on verification of the accounts and records found that the appellants had been manufacturing and clearing bolts and nuts under the guise of rivets by evading Excise duty and the proceedings resulted in the impugned order appealed against.
3. Shri Chopra, the learned Counsel for the appellants, submitted that the period of levy relates to the years 1983-84, 1984-85 and 1985-86 and the authorities examined various dealers who purchased the goods in question from the appellant from time to time during the said period. It was submitted that the appellant has only given an exculpatory statement and reliance has been placed on the statements recorded from about 250 persons and the statements were recorded during the period 9.1.1986 to 20.4.1986. It was urged that people dealing in hardware goods, as relied on, would be able to give evidence only with reference to their accounts which they are bound to maintain in their normal course of business. It would be impossible for any person to speak from memory with reference to what he or a firm purchased several years earlier from the appellants. The best evidence available should have been collected by the authorities and the best evidence, viz. documentary evidence is or should have been available, the authorities should have examined the dealers with reference to their accounts books and this not having been done the investigation is imperfect, lopsided, leaving an unbridgeable lacuna, the benefit of which should accrue in favour of the appellant, particularly when the proceedings are penal in nature.
4. The learned Counsel also referred to similar proceedings instituted against similar manufacturers culminating in an order of adjudication at the hands of the Astt. Collector of Central Excise, Madras, dated 2.11.1988 and referred to para 46 of that order where the adjudicating authority referring to the statements of various persons has made the following observations:
Before deciding the case, I once again reviewed the statements recorded from the dealers listed in Annexure-I to the show cause notices. I find that the statements fall into two broad categories; one where the dealers have stated that they deal in all types of hardware items including bolts, nuts and rivets etc., and another where they have stated that they deal only in bolts and nuts and not any other items. Wherever the dealers have deposed that they were dealing in bolts, nuts, rivets or hard-wares and added that they received bolts only even though the invoice described the goods as 'rivets' but no corroborative evidence is available, I consider that the benefit of doubt has to be extended keeping in view the retractions made by some of the dealers at the time of cross examination. Also according to the depositions of some of the dealers no commodity-wise accounts of receipts or sales are maintained by them and since they admit to dealing in not only bolts and nuts but also other hardware items including rivets, such dealer's statements cannot be relied upon as sole evidence against the party. I therefore give the benefit of doubt in respect of the supplies made to such dealers listed in Annexure-B. It was contended that on the basis of the aforesaid reasoning, in the present case also the appellant would be entitled to the benefit of doubt, particularly when most of the dealers to whom goods have been supplied are dealers dealing in rivets and also in bolts and nuts. The learned Counsel referred to the Writ petition filed by M/s. Madras Fastners in W.P. No. 10112 of 1988, wherein the Hon. Madras High Court dealing with the case in similar cases observed as under:
...it is certainly a mater to be decided by the respondent at this stage and this Court is not expressing any opinion now. If the Accounts Books are withheld and the petitioner is aggrieved on that score, it is open to the petitioner to challenge the final orders on that ground also.
It was contended that by applying the principles of illustration 114-G of the Evidence Act, adverse inference should be drawn against the Department in the absence of production of best evidence, viz. the accounts books of various dealers who purchased the goods of the appellant. The learned Counsel, in this connection, placed reliance on the ruling of the Supreme Court in the case of Gopal Krishnaji Ketkar v. Mohammed Haji Latiff and Ors. . The learned Counsel further submitted that the authorities also did not collect any evidence relating to products manufactured by the appellant, and though officers of the Central Excise were visiting appellant's premises as the appellants were the licensee under the Act no irregularity was found by the authorities. In respect of a batch of appeals preferred by various appellants in similar proceedings instituted against them by the Central Excise authorities in similar circumstances in Appeal Nos. E/SB/885/89, 891/89, 892/89, 93/89, 1337/89, 1338/89 and 1339/89, the Tribunal by order dated 27.10.89 in E/SB/Order No. 215/89 set aside the order of adjudication and remanded the matter to enable the appellants to cross-examine the various third parties on whose statements the Department had placed reliance against them and whose cross-examination was not allowed in entirety. It was submitted that in the present case even though the appellant did not specifically seek the cross-examination of the very same persons in view of the fact that in connected cases when whose very persons are to be summoned as on date, in the interests of justice, the present impugned order also may be set aside so as to enable the appellant to join with other persons in cross-examining those witnesses on whose statement reliance is placed by the Department against the appellants. The appellants were not claiming any special privilege and only prayed for cross-examination of those witnesses who were going to be summoned not on account of the appellants, but on account of the other parties in other appeals and, therefore, the prayer of the appellants may not be negatived on the only ground that the appellants prior to the adjudication did not seek cross-examination of those witnesses. Finally, it was urged that in any event the levy of penalty is not called for.
5. Shri Gregory, the learned SDR submitted that the occurrence took place in 1986 and the officers visited the appellant's premises on 8.1.1986 and 27.1.1986 and found that substantial quantity of excisable goods, viz. bolts and nuts were ready for clearance without being accounted for in the statutory register. The learned SDR also referred to the statement of Shri Aswini Kumar Sharma, Sales Executive of the appellant firm, who had given an inculpatory statement admitting the manufacture of goods and clearance without payment of excise duty. Reference was also made by the learned SDR to the seizure effected by the authorities from the premises of M/s Narayana and Co. Bellary and M/s Narayana & Co. had also given a statement in reply to the show cause notice stating that they placed orders with the appellant for the first time for supply of 100 kgs. of bolts and they were supplied under invoice Nos. 3657 dated 5.9.1985 and 3667 dated 7.9.1985 and the goods were mentioned as rivets in the invoices. The learned SDR also referred to the discrepancy between the original invoice and the duplicate invoice of the appellant. The learned SDR submitted that even though in a batch of similar appeals the matter was remanded to facilitate cross-examination of those parties or the various third parties, the appellants would not be entitled to claim such privilege in the absence of a specific plea for such cross-examination.
6. We have carefully considered the submissions made before us. The issue arising for determination in the appeal is whether the appellants have cleared bolts and nuts under the guise of rivets as contended by the Department. The Department has recorded statements from about 250 persons in or about 1986. Those persons were dealers in hardware goods and have given evidence from their memory without reference to any of their records. In respect of the batch of appeals filed by some manufacturers who were similarly proceeded against by the Department, viz. M/s Garg Fastners, M/s. Madras Fastners and others, the Tribunal by order dated 27.10.1989 referred to supra in the said batch of appeals remanded the mater by observing as under:
We have carefully considered the submissions made before us. It is an axiomatic proposition of law and a cardinal facts of principles of natural justice that if reliance is sought to be placed on the statement recorded against a person behind his back, the aggrieved person is entitled to exercise his right of cross-examining the said person to challenge the veracity of the statement made against him. In the present case we note that the crucial question for consideration would be as to whether the various dealers actually purchased Bolts and Nuts or rivets from the appellant and apart from the statements, this could be better substantiated only with reference to the account books kept by the various dealers in the regular course of their business because it would not be possible for any person to recall and speak from memory as to what were the goods he actually purchased several years earlier from a particular manufacturer. In this context one should also take note of the statements of some of the dealers who stated that they were only dealing in Bolts and Nuts and not rivets. In these circumstances, when all the dealers are assessees under the Sales Tax Act and are in possession of account books maintained in the course of regular business transaction in the interests of justice, it would be worthwhile to summon these persons with their account books for purpose of giving evidence so that the veracity of their statements could be tested and ascertained with reference to the same. Therefore, in the factual background of this case, we are inclined to think that the request of the appellants for cross-examination of the persons with reference to their account books would appear to be quite reasonable and in conformity with the principles of natural justice. Therefore, in this view of the mater, without expressing any opinion on the merits of the issue, on a technical ground that the impugned order is violative of the principles of natural justice for the reasons set out above, we set aside the impugned orders appealed against and remit the appeals for reconsideration by the adjudicating authority in the light of our observations above and in accordance with law after affording the appellants herein a reasonable opportunity of being heard in the matter.
The Tribunal while making this order took note of the following observations of the Madras High Court in the writ petitions filed by those appellants in W.P. No. 10112/88 and 11093/88:
It is unnecessary to say that the respondent will certainly give a reasonable opportunity to the petitioner to prove its case and that the petitioner would be entitled to cross-examine all those witnesses whose statements are sought to be relied on by the Department. In so far as the production of the account books is concerned, it is certainly a matter to be decided by the respondent at this stage and this Court is not expressing any opinion now. If the account books are withheld and the petitioner is aggrieved on that score, it is open to the petitioner to challenge the final orders on that ground also.
In the present case the learned Counsel contended that all those witnesses who have been directed to be produced for cross-examination in the aforesaid batch of appeals covered by order No. E/SB/215/89 dated 27.10.1989 have not yet been summoned and when they are going to appear, the appellants also could be given a liberty to join in the cross-examination. It was submitted that merely because the appellants did not ask for the cross-examination, denial of such a right to the appellants in the facts and circumstances set out above would cause them irreparable loss and injury and would not be in the interests of justice. The witnesses are not going to be summoned for or on behalf of the appellants. The appellants are restricting the right of cross-examination only to such of those witnesses who are to appear for cross-examination in the remanded case cited supra. Summons have not been sent to those witnesses as on date. In such a circumstance we are of the view that in the interests of justices it would not be improper to remand this appeal also by giving the appellants the right to cross-examine those witnesses who are to appear for cross-examination by the appellants in the other cases. We also take note of the fact that the Department is not going to suffer any inconvenience in permitting such cross-examination by the appellants. The Department is not asked to summon those witnesses on behalf of the appellants. The Department would be making those witnesses available in the case of other persons and the appellants would only like to join those persons to cross-examine those witnesses. Therefore, in the above peculiar circumstances it would be harsh to deny the request of the appellants. Since we are remanding the matter to the adjudicating authority for the reasons stated above by fixing the appellants the right to cross-examine those witnesses who are to be summoned in the case of other appellants covered by order of the Tribunal dated 27.10.1989 in E/SB/Order No. 215/89, we do not want to express any opinion on the various pleas urged on behalf of the appellants. We, therefore, without expressing any opinion on the merits of the matter and also on the other pleas, leave the same to be considered by the learned adjudicating authority. In this view of the matter the impugned order is set aside and the matter remitted with a direction that the appellants be permitted to participate in the cross-examination along with various other appellants, such as M/s Garg Fasteners, M/s. Madras Fasteners, M.K. Mittal and R.K. Mittal etc. with reference to the Judgment of the Tribunal dated 27.10.1989 cited supra. We make it clear that the appellants will not be entitled to summon any witnesses of their own and would only have the limited right of cross-examination of those witnesses who are to be summoned not on account of the appellant (emphasis applied) but on account of the other parties covered by Tribunal's Order No. E/SB/215/89 dated 27.10.89 cited supra. It would be open to the appellants to urge all pleas and adduce other evidence as are open to them in support of their various contentions. In the result the impugned order is set aside and the matter remanded in the above terms.
Dt. 7.2.1994 Sd/-
(S. Kalyanam) Member (j) V.P. Gulati, Member (T):
7. I have given a careful thought to the order recorded by my learned Brother and I am not able to agree with him that the matter should be remanded to the lower authority.
8. It is a case where the proceedings were initiated in October, 1986 and wide-ranging investigations with about 200 dealers were carried out by the Central Excise authorities to ascertain the nature of the goods which were sold by the appellants and documents and other records which brought out the modus operandi adopted by the appellants i.e. clearance of bolts and nuts invoiced as rivets was brought out. The appellants were issued with the show cause notice and were given full opportunity to meet the charge. The work-sheet on the basis of which the demand was raised was also furnished to the appellants. The appellants before the learned lower authority raised various objections and put forth pleas both on facts and on law and among other things made pleas in respect of the evidence of the dealers, who had stated that they were purchasing bolts and nuts and not rivets from the appellants and attacked the varacity of the evidence on various grounds but yet they did not choose to call them over for cross-examination to elicit the facts in regard to the purchases made by them from the appellants. In this background their omission to cross-examine the dealers during the proceedings before the learned lower authority was a deliberate one and this appears to have been done by them taking note of the evidence against them. They probably felt safer to attack the evidence on various grounds rather than to get any adverse inference by cross-examining the said dealers at that time. It is seen that these dealers were spread all over South in different Central Excise Collectorates and statements had been recorded from them by different Central Excise officers at different points of time and most of them had given statements stating that while the appellant's supplied bolts and nuts they invoiced them as rivets. Faced with this situation the appellant's omission to cross-examine them is quite understandable from their point of view. They knew the facts about their dealings and obviously were not prepared to face the situation of their customers telling about their transactions to their face. There is otherwise no reason why when the appellants have extensively made their pleas in regard to the evidentiary value of the statements as set out in paras 12, 13, 20 and 21 of the learned lower authority's order, they did not choose to meet the evidence head on by confronting their customers. The appellants were represented by a Consultant, who as seen from the record, was quite knowledgeable. The appellants before us have taken a plea that inasmuch as in another proceedings of similar nature the statements of the same dealers have been relied upon and since cross-examination has been ordered in those proceedings of those dealers, the appellants may also be allowed the benefit of cross-examination at this stage. I observe that in the other case there was a specific request for the cross-examination of the dealers and the Departmental authorities had refused their request, which in law should have been allowed, and on account of this failure of the authorities the matter has been remanded permitting this cross-examination. The case pertains to the year 1986 and it is not certain whether at this stage after 8 years the Department would be able to secure the presence of the dealers and if so, whether the records etc. with the dealers could be made available for making the cross-examination effective and whether after such a long lapse of time any reliable information can be elicited from the dealers. In any case for the lapse on the part of the Department, the Department has to take the consequences in case the dealers are not able to substantiate their statements etc. at this late stage but that is not to say that an assessee who had all the opportunity to cross-examine at the relevant time and chose not to do so, should be beneficiary of the lapse on the part of the Department. For the negligence or omission on their part the assesees cannot take advantage. As it is in the grounds of appeal filed by the appellants before us the appellants have taken the ground at ground No. 5 that the Collector ought to have held that the non-examination of the dealers and the fact of non-production of stock registers, sales books, purchase books of relevant period is fatal to the department case and that the appellants have not been given sufficient opportunities to test the veracity of the statements made by the dealers. From the above what can be read is that the Collector on his own should have examined the dealers and they have not themselves stated that the cross-examination of the dealers should have been allowed. It is only at the time of argument stage that the learned Advocate for the appellants made this plea. By allowing cross-examination just for the reason that in another proceedings some persons are being cross-examined, when the appellants themselves did not feel it necessary to cross-examine them at the adjudication stage, will set a bad example for procrastinating and prolonging the adjudication proceedings. The law requires the appellant should be given a reasonable opportunity and it is not the case of the appellants that a reasonable opportunity had not been given to them. In this background, therefore, I hold that no case has been made out for remanding the matter for allowing the appellants an opportunity of cross-examination.
9. Adverting to the merits of the case, I observe that the proceedings against the appellants were drawn based on the following:
i) the dealers used to place orders for the supply of the goods to one phone No. 552682 and the supply will be made by M/s. Tamilnadu Fasteners or any other group concern.
ii) they used to get supplies of bolts while the same was described as rivets in the invoices.
iii) even for dealers who do not deal in MS rivets the goods supplied i.e. bolts and nuts were invoiced for 'rivets' only.
iv) certain dealers have asked the firm to send revised bills for bolts instead for rivets.
v) on several occasions, the firm was mentioning the goods as 'bolts' in the original copy of the invoice and the same was described as 'rivets' in the duplicate copies of the invoices.
vi) bolts and nuts were removed in the guise of rivets without payment of duty to dealers. One such occasion was the bolts received by M/s. V.A. Narayana and Brothers, Bellary. The Superintendent of Central Excise, Bellary, while investigating the case seized 67 kgs. of such bolts from the premises of M/s. V.A. Narayana Brothers, Bellary.
On the day of the visit of the officers some unaccounted quantity of bolts and nuts was also seized. The learned Advocate for the appellants pleaded that the partner of the appellant company has not given any inculpatory statement and no evidence was recovered from the appellants regarding the quantum of goods viz. bolts and nuts manufactured and cleared by them. He pleaded that the officers of the Department, even though the appellants were working under exemption limit, were visiting the appellant's, factory and there is no question of any clandestine manufacture or removal of the goods by them. He pleaded that there was nothing on record to confirm with any degree of certainty that the alleged goods were cleared without payment of duty. He pleaded that while the statements of the dealers have been relied upon by the learned lower authority, he should have examined their books and accounts also before he comes to any conclusion regarding the quantum of bolts and nuts sold by the appellants to them. He pleaded that the appellants have been implicated by designs of others. He also pleaded that inasmuch as the account books of the dealers were not produced adverse inference should be drawn against the Department in regard to their charges. He cited the case of Gopal Krishnaji, Ketkar v. Mohammed Haji Latiff and Ors. . He pleaded that in another case decided by the Additional Collector of Central Excise, Madras, in order-in-original No. 37/88 dated 2nd Nov. 1988 in File C. No. V/Ch. 83/15/3/87-Cd. Adj. the learned Addl. Collector had given the benefit in respect of bolts and nuts alleged to have been sold to dealers who had been dealing both in rivets and bolts and nuts and drew our attention to para 46 of that order. The relevant portion is reproduced below for convenience of reference:
I find that the statements fall into two broad categories; one where the dealers have stated that they deal in all types of hardware items including bolts, nuts and rivets etc., and another where they have stated that they deal only in bolts and nuts and not any other items. Wherever the dealers have deposed that they were dealing in bolts, nuts, rivets or hardwares, and added that they received bolts only even though the invoice described the goods as 'rivets' but no corroborative evidence is available, I consider that the benefit of doubt has to be extended keeping in view the retractions made by some of the dealers at the time of cross-examination. Also according to the depositions of some of the dealers no commodity-wise accounts of receipts or sales are maintained by them and since they admit to dealing in not only "bolts and nuts but also other hardware items including rivets, such dealer's statements cannot be relied upon as sole evidence against the party. I therefore give the benefit of doubt in respect of the supplies made to such dealers listed in Annexure-B. He has pleaded that similar benefit should be given in the case of the appellants also. Lastly he pleaded that in any case the penalty levied was disproportionately high as the duty evasion involved is Rs. 1,64,464.18 and the penalty levied is Rs. 60,900 and prayed for reduction in the penalty.
10. The learned SDR for the Department pleaded that the case pertains to 1986 and action was initiated against the appellants pursuant to information on 8.1.1986 when the officers checked the factory premises of the appellants. He pleaded that the authorities found the appellants had cleared goods without entry in the statutory records and also unaccounted quantity of bolts and nuts were seized from the appellant's premises when the same were lying packed and the Sales executive of the appellants, who was present, admitted that the goods were intended for clearance without payment of duty. He pleaded that the appellants were summoned to produce their records when they took the plea that the same had been destroyed. The authorities, therefore, after examining their registers, etc. made enquiries with their buyers through the officers located in different Collectorates. During the course of the enquiry, he pleaded, from one dealer M/s. V.A. Narayana and Co. in Karnataka Collectorate, 67 kgs. of bolts and nuts which had been received by them from the appellants invoiced as rivets were seized and the said Narayana & Co. vouchsafed for this fact. He pleaded that the appellants had been indulging very cleverly in the modus operandi of clearing bolts and' nuts with the original invoice bearing the description of the goods as bolts while the duplicate invoices kept by them in their records showed the same as rivets. He pleaded that all these facts had come to light after wide-ranging enquiries were carried out by the authorities and invoices were collected from the appellant's customers and compared with some of the invoices available with the appellants. He pleaded that the Department offered cross-examination of the dealers and it was the appellants who refused the cross-examination stating that they were co-notices. He pleaded that some of the dealers have protested when they received invoices describing the goods supplied to them as rivets when actually they had ordered for and received bolts, and nuts. He also drew our attention to para 21 of the Collectors order wherein the appellants took a plea that the dealers were not maintaining proper accounts and the quantification, therefore, done was false.
He pleaded that the appellants did not ask for the examination of the books of the dealers. He pleaded as it is the appellants were also being prosecuted in court of law and any plea for remand will also be prejudicial more so when all requirements of the principles of natural justice had been complied with by the adjudicating authority and the appellants themselves were remiss in not cross-examining either the dealers or the officers who recorded the statements or even examining the accounts of the dealers based on which the amount had been quantified.
11. It is observed that the proceedings against the appellants were initiated based on the information that the appellants were removing goods viz. bolts and nuts without payment of duty. The appellants functioned in the exempted sector and were claiming exemption in respect of bolts and nuts as well as rivets. As seen from the record, the exemption available for the bolts and nuts falling under Tariff item 52 was only Rs. 7.5 lakhs whereas for rivets which fall under Tariff item 68, the exemption available was Rs. 30 lakhs and Rs. 20 lakhs for the relevant periods. The rate of duty applicable after the exemption limit for bolts and nuts was 15% while for rivets during the relevant period ranged from 10% to 12%. A motive thus did exist for the appellants to show bolts and nuts as rivets in their invoices and in their records. It was only after a thorough investigation by the authorities that the appellant's modus operandi could be discovered. There is no acceptable plea or argument put forth on behalf of the appellants as to why in the original invoices supplied they were showing the goods as bolts and nuts and in the duplicate copies of the invoices relating to the same supply the description of the goods was shown as rivets and an inane plea was taken before the lower authority that the original invoices and the duplicates with them were in different hands. There was uncontrovertible evidence from the dealers stating that they had purchased under the original invoices the goods from the appellants. The authorities also found in the registers of the appellants bolts and nuts, which had been cleared, figuring as rivets in their records. It was only after the painstaking enquiry with the dealers that the extent of the evasion could be discovered by the Departmental authorities. The plea taken before the lower authority was that the statements of the dealers could not be relied upon and they were in the nature of court conspirators and further how the dealers from memory could say that the supplies made to them were of bolts and nuts and not rivets when the documents viz. invoices sent were for rivets. It has to be noted that there have been instances where dealers have protested to the appellants against wrong description of the goods. It thus stands established that the appellants were resorting to this modus operandi. There is no reason why over 200 dealers from whom statements were recorded would implicate the appellants with whom they had only a business relationship and no personal enmity. The only way their evidence could have been discounted was by cross-examining them and also the officers who recorded the statements from them. The appellants chose not to do so and the possible reason for that I have already set out in the opening paragraph. There is no reason, therefore, as to why the statements should not be taken note of for arriving at conclusions. The appellants' dealings in regard to the manipulation clearly stand out with evidence that the authorities painstakingly gathered. The appellants have not challenged the quantum of the duty as worked out based on any individual transaction and have only made general pleas in regard to the same. In quasi-judicial proceedings what has to be seen is whether there is preponderance of probabilities for a reasonable person to come to a conclusion that evasion had occurred to the extent as indicated. In the present case, as seen from the finding of the learned lower authority and my observations above, the charge has been clearly brought home. The appellants did not choose to cross-examine the dealers or their records nor called for them and they cannot now make any grievance of the same that the Department had not produced the said records to prove their case. The case law cited, therefore, cannot be pressed into service in these proceedings. The appellants have made a plea that in another proceedings the Additional Collector, who adjudicated the matter, discarded the evidence of those dealers and the quantum of sales attributed to those dealers who were dealing in both bolts and nuts and rivets. It is seen from the said order that some of the dealers had retracted their statements and they had not maintained any commodity-wise accounts of receipts and sales. No evidence in this regard has been adduced before the Tribunal to entitle the appellants to similar benefit. I, therefore, uphold the order of the learned lower authority so far as the duty demand is concerned. Taking into consideration, however, the quantum of duty demanded and the facts and circumstances of the case, I hold that the end of justice would be served in case the penalty is reduced to Rs. 30,000/- (Rupees Thirty thousand) and I order accordingly. But for the above modification, the appeal is otherwise dismissed.
Dt. 8.3.1994 Sd/-
(V.P. Gulati) Member (T) POINT OF DIFFERENCE
12. Whether in the facts and circumstances of the case the matter should be remanded for allowing cross-examination of the dealers who are being summoned in another proceedings as held by Member (Judicial) or the appellants have been given full opportunity in consonance with the principles of natural justice by the learned lower authority and at this late stage after the appellants had omitted and chosen not to cross-examine the dealers, the appellants should not be allowed to procrastinate and prolong the proceedings by allowing them cross-examination and that appeal has to be decided on merits and the appeal should be dismissed on merits with reduction in the penalty as ordered by Member (Technical).
Sd/-
S. Kalyanam) Member (J) Dt. 10.3.1994 Sd/-
(V.P. Gulati) Member (T) K. Sankararaman, Member (T):
13. This difference of opinion case was heard by me when Shri Madan Chand Chopra and Shri Ramesh Kumar Chopra appeared for the appellants and Shri S. Murugandy, JDR appeared for the respondent Collector. A written note of submission was handed over by the learned Counsel.
14. The difference of opinion has arisen due to Shri S. Kalyanam, Judicial Member as he then was directing in his order the remand of the case to the adjudicating authority for allowing cross-examination of the dealers summoned in another proceedings and Shir V.P. Gulati, Technical Member upholding the order in original passed by the Collector insofar as the duty demand was concerned and reducing the penalty from Rs. 60,900/- to Rs. 30,000/-.
15. The contentions raised on behalf of the appellants were reiteration of the points urged before the original Bench which heard the appeal. Shri Kalyanam noted that in appeals filed by other appellants where the issue involved was the same namely, alleged supply of Bolts and Nuts against bills of rivets, the appeals had been allowed by remanding the matter to the adjudicating authority for de novo decision after allowing the dealers to whom the alleged supplies had been made to be cross examined by the concerned appellant and held that in the present case also the appellants may be allowed the same facility in de novo adjudication though they had not requested for cross-examination when their case was adjudicated by the Collector. They made such a request only in the appeal. It was directed in the order of the Vice-President that the cross-examination should be limited only to the witnesses, summoned in the other proceedings.
16. The order proposed by the Technical Member on the other hand took note of the fact that the appellants had raised various objections against the show cause notice and put forth pleas both on facts and on law questioning the evidence relied upon in the notice but they did not choose to ask for the cross-examination of the concerned persons whose statements had been relied upon. Such a step on their part has been taken to be a pointer to their unpreparedness to face the situation of their customers confirming their transactions in their face. Their request at the stage of appeal to be given the opportunity to cross examine the witnesses called in other similar proceedings had been held to be inadmissible as the appellants in the other cases had made specific requests before the adjudicating authority for the cross examination of the concerned persons which the appellants herein had not asked for. The case pertains to the year 1986 and the adjudication order was passed in January 1988. The appellants were represented by a consultant before the Collector and he had admitted during the hearing that only the bolts and nuts seized from M/s. Narayana & Company, Bellary had been manufactured by the appellants. This was in direct contradiction with their stand taken in reply to the charge that the goods seized from M/s Narayana and Company, Bellary did not represent the supply of MS Rivets made under the relevant invoices. This firm (Narayana) has also been issued show cause notice to which they replied that they had placed an order for 100 Kgs. of bolts and the same was supplied to them under two invoices 3657 and 3667 wherein the goods were described as rivets and that they, however, did not know that Central Excise duty had not been paid thereon. A number of dealers in different states had mentioned in their statements during investigation by the officers of the different jurisdictional Collectorates that they had received bolts from the appellants which were, however, shown as rivets in the corresponding bills. Some of them were only dealing in bolts and even they received bills showing the description as rivets. The Collector had dealt with the objection taken by the appellants that such alleged statements by the concerned customers were not supported by any documentary evidence but stated to be given from their memory and that such statements cannot be reliable. He had held that even if it is from the memory of the concerned dealers, it is from the memory of 200 dealers recorded by different officers. The Collector has also taken cognisance of the admission of their consultant during the personal hearing before him that the appellants were having no evidence to controvert the details given in Annexure II to the show cause notice which they accepted as the factual position. A copy of this Annexure II to the show cause notice has not been provided by the appellants in the appeal papers. However, I find on a perusal of the show cause notice (a copy of which has been included in the Paper Book without the said Annexure) that it referred to details of variation of description in invoices sent to customers and the corresponding duplicate invoices or other records in the appellants records. While the customers copies of invoices described them as Bolts, the corresponding entries in the appellants records referred to rivets. Details of cases where such type of accounting had been followed was furnished in Appendix II to the notice. It was these details that their consultant referred to during the personal hearing before the Collector when he stated that they had no other evidence to controvert. An explanation for such variation between the descriptions given in the original and duplicate invoices had, however, been offered by Shri B.D. Garg, Partner of the appellant firm that it could have been due to the fact that the workers might have loaded bolts instead of rivets. He, however, added that they had supplied bolts against invoices for bolts and rivets against invoices for rivets only. This is contradictory as it does not explain the wrong loading of goods by the workers admitted by Mr. Garg. These irregularities apart, there was also non-accountant of the production in the statutory records as noticed by the officers on their visit to the appellants premises on 27.1.1986 when they found that unaccounted quantity of 3250 Kilograms of Bolts and nuts valued at Rs. 35373/- were kept ready for clearance without entry in the statutory records. Initially their Sales Executive, Shri Ashwani Kumar Sharma accepted the lapse and requested for its condonation but later, in reply to the show cause notice, they denied the allegation and contended that the goods were kept to be entered in the R.G.I. account when they were seized. The explanation was not accepted by the Collector as he found that the goods which had been manufactured much earlier were left unaccounted and were lying ready for clearance.
17. I thus find that there have been a number of their irregularities which have been considered by the Collector leading to his confirmation of duty demand and imposition of penalty. The findings have been assailed on the ground that the case is built on the statements of dealers about having received bolts and nuts cleared as rivets without payment of duty and that there is no documentary evidence and persons who had given such statements had not been made available before the adjudication of the case for their cross-examination. It was this plea that found favour with the Vice-President. The Technical Member had, however, considered the fact that the appellants had not, even while strongly resisting the allegations in the show cause notice, requested for the opportunity of cross-examination of such persons before the Collector. A justifiable inference has been drawn that their not asking for such a facility was to avoid the discomfiture of being told by their customers that they (appellants) had supplied bolts and nuts to them invoicing them as rivets.
18. The Supreme Court Judgment in Gopal Krishnaji Ketkar v. Mohamed Haji Latiff had been cited by the learned Counsel for the appellants in support of the contentions that non-production of evidence available with the department would justify the drawing of an adverse inference against the department. The observation of the Court in the said case was that if a party who is in possession of best evidence which would throw light on the issue in controversy withholds it, the Court ought to draw an adverse inference against him, notwithstanding that the onus of proof does not lie on him and that the party cannot rely on abstract doctrine of onus of proof or on the fact that he was not called on to produce it. I do not agree that this principle advances the case of the appellant. The department did make available all the evidence by way of the statements of the dealers who had received material supplied by the appellants. These coupled with the seizure of bolts from one of the customers in Bellary and their statement and the records and the goods found in the appellants premises, go to establish the validity of the Collector's findings which have been upheld by the Technical Member. The request for cross-examination made at the stage of appeal after their having failed to ask for the same at the earlier opportunity before the adjudication of the case will make it a fruitless exercise. The removal of goods in question had been made during the period 1.3.1984 to 31.3.1986. At this stage cross-examination of witnesses who, even in 1984 when their statements were recorded, gave the same from memory without documents will pose difficulties. The failure of the appellants to request for cross-examination when it was feasible is significant. Moreover, the question of production of documents in regard to which the appellants have cited a Supreme Court Judgment places the appellants themselves in an awkward position as it is they who were unable to produce their documents for the period 1985-86. Their partner, appearing on a summon on 27.2.1986 stated before the Superintendent that these records had been destroyed in fire. In view of such a claim, though, it had not been disproved by the department, the appellant's defence gets weakened. The Collector's finding is based on proper appreciation of the factual evidence.
19. For the following reasons, I agree with the order passed by Shri Gulati, Technical Member for confirming the duty demanded by the Collector in the impugned order and reducing the penalty to Rs. 30,000/-.
20. The appeal may now be placed before the regular Bench for passing the order taking into account the majority view.
Sd/-.
(K. Sankararaman) Member (T) FINAL ORDER
21. In view of the majority decision, the duty demand is confirmed and the penalty is reduced to Rs. 30,000 (Rupees thirty thousand).