Customs, Excise and Gold Tribunal - Tamil Nadu
Punjab Aromatics And Ors. vs Collector Of Central Excise on 26 March, 1991
Equivalent citations: 1992(38)ECR213(TRI.-CHENNAI)
ORDER
V.P. Gulati
1. By these applications the applicants have pleaded for dispensation of the pre-deposit of penalty of Rs. 4,55,000 levied on M/s. Punjab Aromatics, Rs. 25,000 on M/s. Evergreen Fragrances and Rs. 5,000 on Shri K.V. Mohanan in terms of the impugned order of the Collector of Central Excise, Cochin, dated 28.8.1990.
2. The learned Advocate for the applicants pleaded that the proceedings in the case were initiated by the Central Excise authorities who prima facie felt that M/s. Evergreen Fragrances, Kalloor, had manufactured and removed 2406 Kgs. of sandalwood oil valued at Rs. 58,26,292 and had cleared the same without payment of duty and without following the Central Excise formalities. 100 Kgs. of sandalwood oil also was seized from K.V. Mohanan's premises, who is employee of M/s. Evergreen Fragrances. He pleaded that so far as 100 Kgs. of sandalwood oil seized from Mohanan's premises is concerned, ihe learned lower authority, after considering the evidence on record, has held that the same was removed clandestinely from M/s. Evergreen Fragrances without payment of duty. He drew our attention to the order of the learned lower authority in regard to the remaining quantity of 2106 Kgs. of sandalwood oil in respect of which duty demand has been made from M/s. Punjab Aromatics and pleaded that originally the allegation was that this quantity had been removed from the premises of M/s. Evergreen Fragrances but the learned Collector in his order has, after analysing the various sales transactions, has absolved the applicant M/s. Evergreen Fragrances of any wrong doing and had demanded the duty from M/s. Punjab Aromatics in respect of 1536 Kgs. of sandalwood oil. He pleaded that the applicant M/s. Punjab Aromatics had taken the plea before the learned lower authority that they had purchased this sandalwood oil from the hawkers in small quantities over a period of lime and purified the same and then they had sold it. He pleaded that the lower authority had merely observed that the applicants who were in the sandalwood oil business for a long time were expected to be aware that the sandalwood oil was excisable commodity and the same was not covered by any exemption notification and any prudent man would know that sandalwood oil was an item that could be obtained or produced only with the help of machinery like boilers and distilleries and had further observed that even if the pica that they purchased the sandalwood oil from hawkers was to be accepted it was pertinent to note that they purchased the same knowing very well that the goods were liable to duty and had not discharged the duty liability and for that reason levied a penalty of Rs. 4,55,000 under Rule 209A of the Central Excise Rules, 1944 on M/s. Punjab Aromatic equivalent to the duty liability on 1536 Kgs. of sandalwood oil. He pleaded that the learned Collector was in error in levying such a heavy penalty on the applicant just for the reason that the applicant had purchased sandalwood oil from the hawkers which may have been non-duty paid. He pleaded that penalty had been levied on M/s. Evergreen Fragrances and also Mohanan based on assumptions and presumptions. He pleaded for the waiver.
3. The matter was also heard and time was given to both sides to get the information regarding the processes of manufacture of the sandalwood oil. Both the sides informed the Bench that the processes involved were by use of power and in case the crude oil was purchased the same had to be purified in boiler and in the process of distillation and in case the extraction was to be from sandalwood the chips had to be boiled and an elaborate extraction process had to be resorted to.
4. We observe the sandalwood oil in its marketable form has to be in a highly purified form and certainly no hawkers can bring the sandalwood oil in that form for sale as they would not be having the elaborate extraction system as a full-fledged plant is required for the purpose. We observe that while the learned Collector has taken note of the fact that the sandalwood oil as is marketed can be obtained or produced only with the help of machinery like boiler and distillery yet has not chosen to proceed to investigate as to where these processes would have been carried out. He himself has noted that M/s. Punjab Aromatics and M/s. Evergreen Fragrances arc both family-held partnership concerns and in the normal course we would have expected the investigation to be done as to the source of the oil with reference to these two concerns. After making a charge that M/s. Evergreen Fragrances have manufactured and removed clandestinely large quantities of sandalwood oil, the authorities appear to have shifted the ground totally and the learned Collector has proceeded to hold M/s. Punjab Aromatics as liable to payment of duty in respect of 1536 kgs. of sandalwood oil and has levied a penalty equivalent to that amount of duty as leviable on these goods under Rule 209A. Needless to say the burden is on the authorities to prove that the goods were non-duty paid and the goods were liable to duty and it was, therefore, essential for the purpose to direct the investigation towards the source from where the goods emanated. The closest source in the present case appears to be M/s. Evergreen Fragrances and the authorities failed to follow up on this by studying the manufacturing processes and the capacity of M/s. Evergreen Fragrances, the consumption of electricity, the shifts worked, the accounts of raw material, etc. to arrive at whether the oil was manufactured at the said factory. Not having done that, to us it appears the learned Collector has quitely shifted his basis to demand the duty to M/s. Punjab Aromatics without holding that they were the manufacturers. To us it appears prima facie that invoking of Rule 209A on the basis of the facts brought on record by the learned Collector and his findings in that regard is not at all applicable. Rule 209A reads as under:
Rule 209A. Penalty for certain offences.-
Any person who acquires possession of, or is in any way concerned in transporting, removing, depositing, keeping, concealing, selling or purchasing, or in any other manner deals with, any excisable goods which he knows or has reason to believe are liable to confiscation under the Act or these rules, shall be liable to a penalty not exceeding three times the value of such goods or five thousand rupees, whichever is greater.
No facts have been brought on record to attribute knowledge to M/s. Punjab Aromatics in regard to the non-duty paid nature of the goods when they acquired the same. There is no evidence on record in this regard. Prima facie to us it appears that Rule 209A has been invoked more on presumption than on any basis of evidence. We are also constrained to observe that the learned adjudicating authority has tried to appear to be very strict while letting off the person who was originally charged with the removal of the goods without payment of duty very lightly and without conducting an indepth probe. In view of the above, taking into account the facts and circumstances of the case, we hold that the applicant M/s. Punjab Aromatics have a prima facie case in their favour and we, therefore, dispense with the pre-deposit of the penalty levied in terms of the impugned order. So far as the applicant M/s. Evergreen Fragrances is concerned, we hold that no sufficient cause has been shown for dispensation with the pre-deposit and we direct them to deposit the duty of Rs. 35,280/- as demanded in terms of the impugned order and also the penally of Rs. 25,000/- levied under the said order on or before 27th May, 1991 and report compliance by 31st May, 1991. So far as applicant Mohanan is concerned, we direct him also to deposit the penalty of Rs. 5,000/- in terms of the impugned order as no case for dispensation of pre-deposit has been made out, on or before 27the May, 1991 and report compliance by 31st May, 1991.