Customs, Excise and Gold Tribunal - Delhi
R.K. Mill Board (P) Ltd. And 9 Ors. vs Cce on 28 January, 2000
Equivalent citations: 2000(69)ECC174, 2001(135)ELT1296(TRI-DEL)
ORDER G.R. Sharma, Member (T)
1. These ten appeals are against fixing the norms of production, confirmation of duty demand and imposition of penalties. These appeals arise out of the same impugned order, therefore, they were heard together and are being disposed of by this common order.
2. The facts of the case in brief are that the appellants manufacture kraft paper. An information was received in the office of the Asst. Commissioner that this unit had been removing kraft paper manufactured by it surreptitiously without payment of duty by maintaining parallel sets of books of GP-1s/invoices and by issuing therefrom GP-1s/invoices to M/s Sapan Paper House without accountal thereof in their statutory records. At the time of visit of the Central Excise Officers to M/s RKMB, the factory manager, Shri Hari Mohan Maheshwari and Shri Jay Kumar, Accountant were present. They informed the Central Excise Officers that they were authorized signatories of M/s RKMB in the central excise matters. They produced documents/records asked for by the visiting officers. The officers resumed some of them. Statements of S/Hari Mohan Maheshwari and Jay Kumar were recorded. In his statement, Shri Hari Mohan Maheshwari stated that he had been working in M/s RKMB for about 12 years and was authorised to sign the documents pertaining to central excise affairs. He stated that he used to inspect the covering receipts of raw materials and clearance of finished foods; that pre-authentication of the invoice book was done by the Directors but sometime by him; that each invoice book was having 50 sets of invoices; that he perused the invoice book which did not bear serial number on any of the invoice; that duplicate copies of first 4 sets of invoice contained in the said invoice book bore his signature and the rest did not, that he signed the duplicate copies of four sets of invoice book under the instruction from the Directors; that he saw six digit and thirteen digit numbering machines recovered from their factory by the visiting officers in his presence; that he was not aware of intended use of those machines; that whatever documents were recovered in his presence, he signed those documents in token of having seen them. In his another statement recorded on 21.06.96, he stated that he was shown GP-1 book which was used in April 1991. On being asked as to why two type of copies of GP-1s differed from each other while the same entries of both RG 23 A Part II and PLA were indicated on them, he stated that the goods on those GP-1s were cleared under the instructions from the Directors, namely, S/Shri Ashok Kumar, Nikhil Kumar and Mukesh Kumar; that the quantity, duty, cess, vehicle, consignee and RG 23A Part II debit entry differed from each other but the PLA entry No. 311 was common in each of them, though the dates indicated against the said PLA entry differed. When asked about difference in the particulars, he stated that the finished goods were separately consigned on each of them under the instructions of the Directors. In respect of difference also, he stated the consignments were despatched under the instructions of the Directors. On the question of the stamp of Inspector, Central Excise appearing on the copies of GP-1s, he stated that at the time of preparation of such GP-1s there did not exist any such stamp and that he did not know how and when the stamp in question appeared on the GP-1s.
3. Shri Jay Kumar, in his statement recorded on 21.6.96 stated that he was authorised signatory; that he maintained the statutory records under the central excise law; that he prepared the invoices, packing slips, etc. relating to the clearances of kraft paper manufactured by them; that apart from signing his own name, he signed all the original GP-1s in the name of Shri Ashok Kumar at the place provided thereon for authorised signatory; that he did not know when and as to how the stamp of the Inspector was affixed and that only the Directors of M/s RKMB were aware of it; that on the instructions of the Directors, he used to make entry in GP-1; that he did not know whether or not the amounts of duty indicated on each of them were in fact debited in the said statutory books of accounts.
4. Shri Sanjay Gupta in his statement dt. 21.6.96 stated that he was working as Asst. Accountant and was looking after the bank work, besides maintaining ledger, journal, etc.; that their Directors used to order the person preparing the clearance documents to sign on their behalf for the sake of their convenience; that he was complying with the orders of his Directors; that on a specific query, he stated that he used to be given the GP-1s to be issued in three copies; that such GP-1 already bore the fake signatures and stamp of the Inspector; that he used to put forged signatures of Ashok Kumar.
5. Central Excise Officers searched business premises of M/s SPH and found some incriminating documents which were taken into possession. Statement of Shri Promod Kumar Jain, partner of M/s. SPH was recorded. He stated that M/s. SPH was carrying on trading activities of paper; that they were purchasing paper from M/s RKMB on outright purchase basis as well as on purchase for sales; that the goods were received by them under invoices accompanied by bills.
6. Statement of Shri Chaman Lal partner of M/s SPH was also recorded who corroborated the statement of Shri Promod Kumar.
7. Shri Ashok Kumar, Director of M/s RKMB, in his statement dt. 27.6.96 stated that he was 'slumbering Director'; that he was not looking after the work of the factory; that he was authorised to sign the documents relating to the excise on behalf of M/s RKMB but he did not sign the GP-1s shown to him but his name nevertheless appearing thereon. On enquiry as to who prepared the documents and signed the original GP-1s, he stated that it was conspiracy to blackmail the factory Directors; that when he was shown invoice book containing triplicate copies of invoice, he confirmed having preauthenticated 8 invoices.
8. Shri Nikhil Kumar, Director of the firm in his statement recorded on 27.6.96 stated that he was looking after the work relating to finance; that the central excise matters were looked after by S/Shri Hari Mohan Maheshwari, Jai Kumar and Sanjay Gupta; that Shri Hari Mohan Maheshwari and Shri Jai Kumar used to sign the documents; that sometime he also signed them. Statement of Shri Mukesh Kumar was recorded who stated that S/Shri Hari Mohan, Jai Kumar and Sanjay Gupta used to prepare the documents for clearance of kraft paper and that they were responsible for maintaining the Central Excise records; that they were authorised to sign the papers of central excise.
9. On the basis of the scrutiny of the records and the statement of various persons connected with the firms, the department issued SCNs to the appellants asking them to explain as to why the production which they suppressed and which was being clandestinely removed should not be redetermined, why the duty should not be demanded and why a penalty should not be imposed on them.
10. In reply to the SCNs, the appellants submitted that one Sanjay Chaudhary son of driver of one of the Directors became confidant of the staff. One of the Directors noticed that certain blank forms of gate pass book, challans and other papers disappeared from the factory; that suspicion fell on Sanjay Chaudhary; that the entire conspiracy was hatched by Sanjay in connivance with others; that the request was made to provide copies of the relevant documents and the retained documents; that these documents were not recovered from the appellants; that these documents were not collected or obtained from the consignees; that the genuineness of the said retained documents is matter of doubt and that the contention of the appellant is that they have been fabricated to create false evidence; that the documents have been manipulated; that the original documents appear to have been torn off at the right hand top and that similarly bottom portion of the documents had been torn off to destroy the evidence of writer.
11. The appellants contended that the retained original GP-1s/invoices have no force as evidence; that Section 36A prohibits the department from using these documents against the appellants as the burden of proving them as such lies on the person or persons from whom they were recovered; that since the department has possessed and retained them, the entire burden is cast on it; that repeated requests were made for producing their duplicate and triplicate copies which were not furnished.
12. It was submitted that the statements of various persons were recorded in predetermined manner under coercion; that these statements have been retracted; that the affidavits have been sworn in ; that the statements were recorded under duress; that this coercion under which statements were recorded has supported by the fact that the department did not have duplicate or triplicate copies of the documents and did not disclose that they were not in a position to obtain them. It was contended that the partners of M/s SPH when questioned about the consignment receipt they did not confirm their receipt nor their records were seized to show that the goods were received by them; that the statement of Shri Hari Mohan Maheshwari was false; that the allegation has been made about suppression of production and clearance which are proposed to be assumed on the basis of the production of kraft paper by two manufacturers in the area; that two firms which have been taken as standard for normal production have shown their production from the raw material used as 71.95% and 69.35%; that in the case of the appellants, figures of production have been calculated at 64.8% in 1991-92, 60.95% in 1992-93, 60% in 1993-94 and 63.76% in 1994-95: that such comparisons of production are odious; that the recovery of the finished products depends on the quality of the raw materials and other parameters; that determination of the normal production has been taken up for the first time; that no norms of production were ever fixed on the basis of relevant parameters under Rule 173E; that no opportunity was given to the appellants to contest parameters; that it has been assumed that the quantity of kraft paper mentioned in the retained GP-1s/invoices were produced; that there was no evidence that these quantities had actually been removed from the factory; that for determination of the norms of production, the factors such as installed capacity of factory, labour employed, power consumed, raw materials utilisation were not taken into consideration; that Rule 209A is not justified against S/Shri Ashok Kumar, Nikhil Kumar and Mukesh Kumar, Directors of M/s RKMB and against S/Shri Hari Mohan Maheshwari, Jai Kumar and Sanjay Gupta, Employees of M/s RKMB and Shri Pankaj Kumar, owner of the truck and S/Shri Promod Kumar Jain and Chaman Lal, partners of M/s SPH under Rule 209A. After careful consideration of the submissions, the Commissioner held as indicated above.
13. Shri Praveen Sharma, Ld. advocate submits that the case of the Department is based on certain retained documents; that no copy of these retained documents was provided to the appellants inspite of repeated request; He submits that the statements of employees have been relied upon which should have not been relied upon especially in view of the fact that the statements are retracted and complaints were lodged to say that the statements were not voluntary and true; that the affidavits were sworn in to say that the statements were wrong.
14. Ld. Advocate submits that the Department has unilaterally determined the norms of production without giving the appellants any opportunity to defend their case. He submits that the production of the appellants company is determined on the parameters and the production of M/s Meenu Paper Mills. He submits that Meenu Paper Mills is closed concern in the year 1994-95 and 1995-96 whereas the production of the appellants company is for 5 years. He submits that the emphasis is on yield of the appellants company which has been found to be 63.7% as against 68% of M/s Meenu Paper Mills. He submits that in view of the fact that the yield of mills depend on many factors; that no evidence has been placed on record as to which factors were taken into consideration to determine the yield and to calculate the production that no opportunity was given to the appellants to disprove their contention. He, therefore submits that looking to the above facts and the circumstances of the case, the appeals may be allowed.
15. Shri Mewa Singh, Ld. SDR reiterated the findings of the lower authorities.
16. Heard the rival submissions. We have considered the evidence on records and the statements of the various persons. We have perused the chart prepared by the counsel for assistance showing comparative yield and calculating the production on the basis of yield. We find that the contention of the appellants is that the natural justice was denied to them. We note that the documents were provided to the appellants. The appellants required certain documents which were not considered and relied upon, therefore were not supplied. The fact, however, remains, the appellants were free for inspecting the records, if they wanted and take copies of the documents except those which were considered as information report and secret documents. We note that the Commissioner has dealt with this issue at length. The appellants submitted reply and attended the personal hearing before passing the order. Thus, there was no denial of natural justice.
17. Insofar as the retraction is concerned, we note that S/Shri Hari Mohan Maheshwari, Jai Kumar and Sanjay Gupta only explained the entries and other narration in the documents shown to them. It is not the case of the Department that they have relied upon only the statements. Thus the retraction will not vitiate the proceedings.
18. Insofar as the determination of the norms of production is concerned, we note that under Rule 173E, the Commissioner is competent to determine the norms of production. In the instant case the norms of production has been determined by the Collector. He has taken the figures from the records of the appellants. We note that there is no illegality in taking production of another unit for comparing purposes. We, therefore, hold that there was no infirmity in determining the norms of production. Insofar as the imposition of penalties is concerned, we note that the appellants' firms suppressed the production and removed the goods and thereby attracted penal action under Rule 173Q and 209 A indicated in the SCN. We note further that S/Shri Ashok Kumar, Nikhil Kumar and Mukesh Kumar are Directors, they were concerned with the clearance, transport, etc. of the goods clandestinely and thus attracted penalty under Rule 209A. Similarly, S/Shri Hari Mohan Maheshwari, Jai Kumar and Sanjay Gupta and Pankaj Kumar were concerned with the transport, storing, removing and clearance of the goods, therefore, the attracted the penalties. Since they were only employees, therefore lower penalties have been confirmed on them. Similarly S/Shri Chaman Lal and Promod Kumar Jain, partners of M/s. SPH were concerned with the receipt of the goods which they had reason to believe that they were liable to confiscation and, therefore attracted the provisions of Rule 209A.
19. Having regard to the various statements made, findings of the Commissioner on those issues and our analysis, we uphold the demand of duty.
20. However, looking to the facts and circumstances of the case, we note that the appellants have been able to make out a case for reduction in penalties. Accordingly, the penalties are reduced as under: -
(1) M/s RKMB Rs. 5 1akhs (2) Shri Ashok Kumar Rs. 50,000 (3) Shri Nikhil Gupta Rs. 40,000 (4) Shri Mukesh Kumar Rs. 10,000 (5) Shri Hari Mohan Maheshwari Rs. 10,000 (6) Shri Sanjay Gupta Rs. 5,000 (7) Shri Jai Kumar Rs. 10,000 (8) Shri Pankaj Kumar Rs. 20,000 (9) Shri Chaman Lal Rs. 25,000 (10) Shri Promod Kumar Jain Rs. 25,000
21. These 10 appeals are partly allowed.